Federal Reserve officials have decided to maintain interest rates at around 5.5%, citing the need for greater confidence that inflation is moving towards 2%. The economy is showing signs of slowing, with the unemployment rate at 4.1%, the hiring rate decreasing, and the number of long-term unemployed workers increasing. Despite these developments, the Fed is not yet ready to lower rates. However, there is growing pressure for a rate cut from Wall Street traders, former Fed officials, and industry leaders. Some argue that delaying a rate cut could increase the risk of a recession, especially with sectors like housing and automotive markets showing weakness. The Fed’s inflation gauge has hit 2.5%, below the target of 2%, prompting discussions about the need to lower rates to support economic growth. Fed Chair Jerome Powell has acknowledged the possibility of lowering rates to prevent economic weakening. Overall, there is anticipation of a rate cut in September to provide relief to various sectors sensitive to interest rates and consumer credit. The Fed’s decision regarding interest rates will be announced following the Open Market Committee meeting.
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Fed maintains interest rates, indicating reluctance to make first post-pandemic cut
