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Federal Reserve maintains interest rates despite the moderation of inflation

Jerome Powell announced that his institution will wait for prices to fall to 2% before cutting the rate below 5.25%.

Jerome Powell, presidente de la Reserva Federal / Cordon Press.

Jerome Powell, presidente de la Reserva Federal / Cordon Press.

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The Federal Reserve announced this Wednesday that it will keep interest rates at 5.5% once again. The president of the institution, Jerome Powell, announced that he foresees a single rate cut throughout 2024 after the rebound in inflation at the beginning of the year.

However, reports on inflation this Wednesday indicated a much softer rise than expected, so the market was expecting a reduction in interest rates. In May 12-month inflation was 3.3% compared to 3.4% the previous month.

Jerome Powell, president of the Federal Reserve, declared that he will maintain rates similar to the current ones until the institution sees inflation seriously cut down. According to Powell, the Federal Reserve aims for 2% annually in the long term as the optimal level for the economy and would be the moment in which it would begin to lower rates.

The Federal Reserve nevertheless chose prudence and continued with the same interest rate for the moment, which could however have worse consequences for the economic stimulus.

Wednesday's inflation data meant that the NASDAQ and the S&P 500 will close the day with record high numbers. Only the Dow Jones fell after the call for caution from the Federal Reserve.