Disinflation is happening, but the Fed wants to wait for more evidence to lower interest rates. (iStock)
On Wednesday, the central bank announced it would maintain the federal funds rate range at 5.25% to 5.5%, where rates have held steady since last July.
The decision was not unexpected and comes as several economic indicators trend in the right direction. Wednesday’s inflation report, which showed inflation rose 3.3% over the 12 months ending in May, and the core CPI rose 3.4%, was better than expected. Federal Chair Jerome Powell said that the report builds confidence that inflation is moving toward the 2% target but said more evidence is needed before the central bank begins easing policy.
“So far this year, the data have not given us greater confidence,” Powell told reporters during a press conference. “The most recent inflation readings have been more favorable than…
