WASHINGTON: The Federal Reserve held interest rates steady on Wednesday but opened the door to reducing borrowing costs as soon as its next meeting in September as inflation continues coming into line with the US central bank’s 2 per cent target.

“There has been some further progress toward the Committee’s 2pc objective,” the central bank’s Federal Open Market Committee said in a statement at the end of a two-day policy meeting in which it kept its benchmark overnight interest rate in the 5.25pc-5.50pc range, but also set the stage for a cut at its Sept 17-18 meeting, just seven weeks shy of the Nov 5 US elections.

While Fed officials are wary of any actions that could mar their data-not-politics approach to setting monetary policy, the steady drop in inflation in recent months prompted a broad consensus that the inflation battle was near an end.

Published in Dawn, August 1st, 2024