by William J. Luther
The American Institute for Economic Research
The Federal Open Market Committee (FOMC) voted to hold its federal funds rate target at 5.25 to 5.5 percent on Wednesday, marking twelve months with the rate pegged to its current level. The FOMC also hinted in its statement that it could soon start cutting rates.
At the post-meeting press conference, Federal Reserve Chair Jerome Powell said the FOMC has “made no decisions about future meetings, and that includes the September meeting.” But he made a September rate cut seem likely:
The broad sense of the Committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate. In that, we will be data dependent, but not data point dependent — so it will not be a question of responding specifically to one or two data releases. The question will be whether the totality of the data, the evolving outlook in the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market. If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September.
Powell noted that the FOMC did not revise its economic projections — including those for the federal funds rate — at this week’s meeting. Consequently, he was somewhat limited in providing more explicit forward guidance.