The wait for a cut in interest rates continues.
The Federal Reserve held off delivering a cut in rates Wednesday. After its July meeting, the Federal Open Market Committee held the target rate between 5.25 and 5.5 percent. It was the eighth straight meeting for the FOMC to hold rates steady at a two-decade high.
“The broad sense of the committee is we’re getting closer to the point at which it will be appropriate to reduce our policy rate. They were not quite at that point yet,” said Federal Reserve Chairman Jerome Powell.
Powell added the committee wants to see more encouraging data on inflation and in the jobs market before making rate cuts.
“The overall sense of the committee as I mentioned that we’re getting closer to the point at which it will be appropriate to begin to dial back restriction,” Powell said. “We’re not at the point yet. We want to see more good data.”
The Federal Reserve raised rates by 525 basis points from early 2022 through last summer in an effort to bring down inflation, which peaked at 9 percent.
The annual inflation rate dropped to 3 percent in June, according to the Consumer Price Index released by the Bureau of Labor Statistics. Powell pointed out that the CORE PCE prices rose 2.6 percent in the past year, inching toward the goal of 2 percent.
The job market also had slowed down. Unemployment increased to 4.1 percent, up from 3.6 percent in June 2023. The economy added 206,000 jobs, which was 14,000 below the monthly average for the past year.
“All of the data points continue to point to the direction that we would want to see,” Powell said.
“What’s in the data right now is an economy that’s growing at a solid pace. A labor market that has cooled off. Unemployment is low. The data overall show a strong labor market. It is neither an overheating economy nor is it a sharply weakening economy… What we’re seeing is strong economic activity – a good labor market and inflation coming down.”
The FOMC’s next meeting is Sept. 17-18. Powell said the committee will review the data at the meeting to determine if a rate cut is needed.
“We get a lot of data between now and September. It is going to be the totality of the data, all of the data, and not just how is it affecting the outlook and balance of risk. That’s going to be the assessment that we do,” Powell said.
Interest rates in the used automotive industry remain high and continue to impact consumers. According to data from Experian, the average interest rate is 11.9 percent. The average term is also above 60 months. The monthly payment on a used vehicle is up $2 from the end of 2023 at $523. The payment is up, while the amount financed has dropped from $26,571 to $26,073.
