The Fed Stands Pat While Big Questions Loom
The timing of the next quarter-point cut in interest rates is the least of the central bank’s problems.
Hoping for the best.
Photographer: Andrew Harrer/Bloomberg via Getty Images
On Wednesday, as most investors expected, the Federal Reserve left interest rates unchanged for now, but said the case for cuts later in the year is stronger than before. That judgment looks reasonable, all things considered.
Right now, the U.S. economy is at or close to full employment, growing at a satisfactory rate, with inflation close to the Fed’s target of 2%. There’s little sign of significant slack in the labor market, so extra demand would be more likely to produce inflationary pressure rather than more jobs and higher output. That’s the case for standing pat.