WASHINGTON, Aug 1: The US Federal Reserve left its key lending rate unchanged again on Wednesday, but signaled that it could make its first cut as soon as September.
After two days of deliberations, policymakers voted unanimously to maintain the US central bank's benchmark interest rate between 5.25 percent and 5.50 percent, the Fed said in a statement -- keeping rates at a 23-year high.
But speaking to reporters in Washington shortly after the decision was published, Fed Chair Jerome Powell said the first interest rate cut could come "as soon as" the Fed's next rate meeting in September if the data continue to suggest it is on track to meet its twin objectives to tackle both inflation and employment.
"The broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate," he said, adding that there had been a "really significant decline in inflation."
"Chair Powell made clear in the press conference that the base-case for Fed officials is to begin cutting rates at the upcoming meeting in September," Citi economists wrote in a note to clients after the decision was announced.
- 'Some' further inflation progress - After a small uptick in inflation earlier this year, recent data suggest the Fed's mission of bringing inflation back down to its long-term target of two percent is now firmly back on track.
Its favored measure of headline inflation eased to an annual rate of 2.5 percent last month, while economic growth has remained resilient, and the labor market has come into better balance.
"In recent months, there has been some further progress toward the Committee's 2 percent inflation objective," the Fed said in its rate decision.
This marks a slight change in tone from its June statement, when it noted only that "modest further progress" had been made.
"The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance," the Fed said, adding that it was "attentive to the risks to both sides of its dual mandate."
All three major indices on Wall Street finished in the green on Wednesday following the Fed's rate decision. —AFP
