Fed holds US interest rates again after three months of disappointing inflation data
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The US central bank, known as the Fed, has again kept interest rates high – at 5.25% to 5.5%.
It comes despite the bank signaling in January that interest rate cuts were around the corner.
Progress in bringing down rates and making borrowing cheaper has been hampered by rising inflation in the US.
It could now be that US rates are only cut once in 2024, less than had been expected.
Close attention will be paid to comments by the chair of the Fed, Jerome Powell, to see which path he expects rates to follow.
Data released last week showed inflation grew 3.5% in March, up from 3.2% in February and 3.1% in January – above the Fed’s inflation target.
A similar situation in the UK
Central banks in the UK, US, and EU are all aiming to bring inflation down to 2%.
The Bank of England faces a similar decision next week when it will announce its own interest rate decision.
Markets had been expecting a cut in May, but are now not expecting one until August, according to data from Refinitv.
Unlike the UK, the US interest rate is a range rather than a single percentage – the Fed does not set a specific figure. Instead, the numbers are a target rate to guide lenders.
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