Fed holds rates steady and notes progress on inflation

cnbc.com:

WASHINGTON – Federal Reserve officials on Wednesday held short-term interest rates steady but indicated that inflation is getting closer to target, which could open the door for future interest rate cuts.

Central bankers made no obvious indications, though, that a reduction is imminent, choosing to maintain language that indicates ongoing concerns about economic conditions, albeit with progress. They also preserved a declaration that more progress is needed before rate reductions can happen.

«The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance,» the Federal Open Market Committee's post-meeting statement said, a slight upgrade from previous language.

«Inflation has eased over the past year but remains somewhat elevated,» the statement continued. «In recent months, there has been some further progress toward the Committee's 2 percent inflation objective.»

That language also represented an upgrade from the June meeting, when the policy statement indicated only «modest» progress in bringing down price pressures that two years ago had been running at their highest level since the early 1980s. The previous statement also characterized inflation as simply «elevated,» rather than «somewhat elevated.»

There were a few other tweaks as well, as the FOMC voted unanimously to keep its benchmark overnight borrowing rate targeted between 5.25%-5.5%. That rate, the highest in 23 years, has been in place for the past year, the result of 11 increases aimed at bringing down inflation.

One change noted that committee members are «attentive» to the risks on both sides of its mandate for full employment and low inflation, dropping the word «highly» from the June statement.

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