Fed Holds Rates, Signals Caution on Future Cuts

Washington, D.C - The U.S. Federal Reserve maintained its benchmark interest rate at 5.25-5.50% on Wednesday, indicating it would only consider rate cuts once it gains more confidence in inflation's sustainable decline towards its 2% target.

In its latest policy statement, the Federal Open Market Committee (FOMC) noted that while inflation has eased over the past year, it "remains somewhat elevated." 

The Fed highlighted recent progress towards its 2% inflation objective but emphasized the need for greater assurance before adjusting rates downward.

"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," the statement read.

Fed officials acknowledged continued economic expansion and a low unemployment rate despite recent moderation in job gains. 

The central bank reiterated its commitment to its dual mandate of maximum employment and price stability.

The Fed will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities as part of its balance sheet normalization process.

Policymakers stressed their readiness to adjust monetary policy if risks emerge that could impede achieving their goals. 

The Fed's assessments will consider various information, including labor market conditions, inflation pressures, and financial developments.