• Likely that gaining greater confidence will take longer than previously expected, says Fed Chair Jerome Powell Reuters Published May 1, 2024 WASHINGTON: The U.S. Federal Reserve held interest rates steady on Wednesday and signaled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings and suggested a possible stall in the movement towards more balance in the economy. Indeed, Fed Chair Jerome Powell said it was likely to take longer than previously expected for Fed officials to gain the “greater confidence” needed for them to kick off interest rate cuts. The Fed’s latest policy statement, issued at the end of a two-day meeting, kept key elements of its economic assessment and policy guidance intact, noting that “inflation has eased” over the past year, and framing its discussion of interest rates around the conditions under which borrowing costs can be lowered. U.S. stocks pared losses following the release of the policy statement while the U.S. dollar fell against a basket of currencies. U.S. Treasury yields fell. Investors in contracts tied to the Fed’s policy rate continued to see the U.S. central bank beginning to cut rates in November and added to bets that it will deliver at least one reduction in borrowing costs this year. US Fed likely to keep rates steady as hopes of early cuts fade “The (Federal Open Market Committee) does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%,” the Fed repeated in a unanimously-approved statement that still indicated the next move on rates will be down. “Inflation is still too high,” Powell said in a press conference after the meeting. “Further progress in bringing it down is not assured and the path forward is uncertain. “It is likely that gaining greater confidence will take longer than previously expected,” Powell said. That continues to leave the timing of any rate cut in doubt, and Fed officials made emphatic their concern that the first months of 2024 have done little to build the confidence they seek in falling inflation. “In recent months,…