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Interest rates will stay in the 5.25% to 5.5% range, the Federal Reserve announced Wednesday, but a rate cut could be in the near future (The Wall Street Journal, subscription).

What’s going on: “A reduction in the policy rate could be on the table as soon as the next meeting in September,” Fed Chair Jerome Powell said at a news conference following the central bank’s July meeting. “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point.”

• Officials noted recent progress on inflation, which they described as “somewhat elevated,” a change from their May description of “elevated.”
• The Fed raised rates at the fastest pace in 40 years in 2022, in an effort to bring down soaring inflation.

A delicate dance: Steadying inflation “meant [the Fed] could treat both sides of their mandate—to maintain low and stable inflation with sturdy labor markets—on a more equal footing for the first time since they rapidly raised rates starting two years ago to combat high prices.”

The economy: The U.S. economy has been on solid footing in 2024.

• Gross domestic product, “the broadest measure of U.S. economic output”—increased at a 2.1% annual rate in the first half of 2024.
• Recent inflation gauges suggest that prices are stabilizing and cost reductions “might be broadening.”
• As for jobs, June saw 1.2 vacancies—down from a high of 2 in March 2022—for every unemployed worker.

What’s next: “While progress has been made with regard to inflation, the Fed is clearly seeking further progress before it’s ready to take action” (The Motley Fool).