Federal Reserve holds rates steady despite Democratic calls to cut

The bank is still working to lower inflation to the target rate of 2%.
Federal Reserve chairman Jerome Powell.

The Federal Reserve on Wednesday announced that it would keep interest rates at the current target rate of 5.25% to 5.5%, even after Democratic senators called for rate cuts to address issues with housing affordability. 

After its first meeting of 2024, the Fed said it would hold target interest rates at the same number it has since July, when it ended nearly an entire year of continuous hikes.

The bank is still working to combat inflation, which grew 3.4% last month compared to the same time the previous year. However, that number is down from the four-decade high of 9.1% in June 2022.

"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," which is the Fed's target rate, the bank said Wednesday.

Meanwhile, Democratic Sens. Jacky Rosen, Nev.; John Hickenlooper, Colo.; Elizabeth Warren, Mass.; and Sheldon Whitehouse, R.I., sent a letter Monday to Fed Chair Jerome Powell, writing: "As the Fed weighs its next steps in the new year, we urge you to consider the effects of your interest rate decisions on the housing market and to reverse the troubling rate hikes that have put affordable housing out of reach for too many."

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