Federal Reserve officials held interest rates at their highest level in more than two decades at their first meeting of 2024 and hinted that their next move will be to lower borrowing costs — even as policymakers made clear they are not yet ready to make that cut.
Jerome H. Powell, the Fed’s chair, said that the country had “six good months” of moderating inflation, but officials wanted to see continued progress before lowering rates.
“We believe that our policy rate is likely at its peak for this tightening cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Mr. Powell said. He added that when it comes to gaining enough confidence to move borrowing costs lower, “we want to see more good data.”
Mr. Powell said that he did not think it was “likely” that Fed officials would have enough evidence to cut interest rates by their next meeting on March 19-20. That could leave investors looking toward later meetings — such as gatherings in May and June — as they consider when the first rate cut might come.
Wall Street had been hoping for imminent rate reductions, and stock prices slumped following the Fed’s meeting and Mr. Powell’s remarks. Investors increasingly bet that borrowing costs would remain unchanged in March.