When will interest rates come down? Federal Reserve expected to offer clues Wednesday
The Federal Reserve is widely expected to keep its key federal funds interest rate unchanged at about 5.5% this week, as it continues to fight persistent inflation in the economy.
The Federal Reserve is widely expected to keep its key federal funds interest rate unchanged at about 5.5% this week, as it continues to fight persistent inflation in the economy.
That rate has been in place since July and has led to a surge in the cost of borrowing.
The Fed's actions are part of a long-standing monetary practice with a simple goal. By making it more expensive to borrow money, whether through loans, credit cards or other financial tools, people and businesses will spend less and inflation will fall to a desirable level — in this case, 2%.
But over essentially the same period, the pace of price increases as measured by the Consumer Price Index has stalled at a little more than 3% on an annual basis, sparking concerns that the central bank will have to keep rates higher for longer.
Many economic observers believe the soonest the Fed could now begin cutting interest rates is at its June meeting, with two additional rate cuts before the end of this year, depending on whether the inflation rate remains above the Fed's official 2% target.
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