Fed Expected to Hold Interest Rates Steady as It Walks Inflation Tightrope

The Federal Reserve is expected to keep interest rates unchanged at 5.5% as it tries to curb persistent inflation. Rates have been at this level since July 2022.

Inflation has stalled at around 3% based on the Consumer Price Index, leading to concerns rates may stay higher for longer before the Fed starts cutting them.

Much of the ongoing inflation is in shelter costs like rents, which some expect will start declining due to more home building.

The Fed aims to cut rates without causing a spike in unemployment and recession. Analysts believe it may make two cuts this year as it targets 2% inflation.

The Fed likely wants to start cutting rates by June rather than nearer the November election to avoid appearing political.