The U.S. Federal Reserve held interest rates steady on Wednesday but stiffened a hawkish monetary policy stance that its officials increasingly believe can succeed in lowering inflation without wrecking the economy or leading to large job losses.
“People hate inflation. Hate it,” Fed Chair Jerome Powell said in a press conference after the end of a two-day policy meeting at which central bank officials held the benchmark overnight interest rate in the current 5.25%-5.50% range, but sketched a stricter policy path moving forward in an inflation fight they now see lasting into 2026.
While Powell said the Fed was “in a position to proceed carefully” with future policy moves, he also made clear the jury was, to some degree, still out on the central bank’s fight to contain the worst outbreak of inflation in 40 years.
“We want to see convincing evidence really, that we have reached the appropriate level” of interest rates to return inflation to the Fed’s 2% target, a judgment its policymakers have not yet made, Powell told reporters. Inflation by some measures remains more than double the Fed’s desired level, though Powell said the pace appeared to be in decline across several key parts of the economy.