The US central bank, the Fed, kept interest rates high again – between 5.25% and 5.5%.
It happens despite the legislator signage in January that interest rate cuts were coming.
Progress in lowering rates and making loans cheaper has been hampered by rising inflation In the USA
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Now this could be it quotes they will only be cut once in 2024, less than expected, as high rates are seen as necessary to move money out of the economy and slow price increases.
Data from last week showed that inflation reached 3.5% in March, up from 3.2% in February and 3.1% in January – above the Fed’s inflation target and higher than expected.
Decreases in inflation are not guaranteed, with Fed Chairman Jerome Powell warning: “Further progress in reducing inflation is not guaranteed and the path forward is uncertain.”
More confidence that inflation is under control will be needed before policymakers start making any cuts.
Earning that trust will take “longer than previously expected,” Powell added.
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“In recent months, there has been no further progress towards the Committee’s 2%. [inflation] objective”, said the head of the bank.
That suggests interest rates will stay higher for longer — but Powell said another increase is “unlikely.”
“The committee does not expect it to be appropriate to reduce the target range [of interest rates] until greater confidence gains that inflation is moving sustainably toward 2%,” the Fed said.
Powell declined to know if, and possibly when, rates would be lowered. “There are ways to cut, there are ways not to cut,” he told reporters.
The UK, US and EU central banks aim to reduce inflation to 2%.
O bank of england it faces a similar decision next week, when it announces its own interest rate decision.
Markets expected a cut in May but now don’t expect a cut until August, according to data from Refinitv.
Unlike the UK, the US interest rate is a range to guide lenders, rather than a single percentage.
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