The Federal Open Market Committee is expected to hold course once again when they meet Wednesday.
The FOMC has maintained the federal funds target rate between 5.25 and 5.5 percent for the past five meetings. The pause in rate hikes followed the Federal Reserve’s aggressive approach to rein in inflation, which peaked above 9 percent. The Fed raised rates by 525 basis points since early 2022.
Recent data from the U.S. Bureau of Labor Statistics show the economy still is hampered by inflation though it has dropped dramatically since topping out at 9 percent in June 2022. The annual inflation rate in February was 3.2 percent, a rise of 0.1 percent from January.
In a speech earlier this month, Federal Reserve Governor Michelle Bowman signaled the FOMC was likely to keep rates steady as they continue to target getting inflation to 2 percent.
“Should the incoming data continue to indicate that inflation is moving sustainably toward our 2 percent goal, it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive,” Bowman said. “In my view, we are not yet at that point. Reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent over the longer run.”
The job market saw a slight uptick in unemployment in February to 3.9 percent from 3.7 percent in January. The economy added 275,000 jobs.
The average hourly earnings increased by 5 cents to $34.57, an increase of 4.3 percent from February 2022.
