March 18 (UPI) — The Federal Reserve announced that it is leaving its benchmark interest rate untouched Wednesday in its first Federal Open Market Committee statement since the start of the war with Iran.
The Fed’s benchmark interest rate remains at a 3.5% and 3.75% range as the committee held on to its projection of at least one rate cut coming this year.
“Available indicators suggest that economic activity has been expanding at a solid pace,” the FOMC statement said. “Job gains have remained low and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.”
As for the war in Iran, the statement said its impact on the U.S. economy is “uncertain.”
The Fed continues to pursue monetary policies it believes will bring the rate of inflation down to 2%. In its statement it said it is “committed to supporting maximum employment,” in pursuit of its target.
Economic reports that inform the Fed’s decision have indicated pressures from inflation remain and economic growth has slowed.
Wednesday’s announcement comes on the heels of a producer price index report earlier in the day that showed the largest increase to the index for final demand goods since August 2023.
Last week, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls fell by 92,000 in February. The unemployment rate increased to 4.4%.
These reports have economists and traders cooling on the potential for interest rate cuts. Eugenio Aleman, chief economist at Raymond James, said in a statement that the wholesale inflation report on Wednesday, “likely reinforces a hold decision.”
Data from the producer price index report predates the beginning of the war with Iran.
