Federal Reserve to keep interest rate at about 5%

(NBC, KYMA/KECY) - The Federal Reserve said Wednesday it was keeping its key interest rate at about 5% the first time it has kept the rate steady in more than a year.

The reason for the hold: Inflation appears to be finally easing.

Now, the fed wants to assess whether it has already raised rates high enough to tame price increases.

Amid prior soaring inflation readings, the Federal Open Market Committee raised interest rates 10 consecutive times between March 2022 and May 2023.

But, the Bureau of Labor Statistics announced Tuesday that the 12 month inflation rate had fallen to 4% the lowest reading in more than two years.

The impact of higher interest rates has been substantial, causing lending rates across the economy, from credit cards to corporate lending, which touched their highest levels in decades.

By making it more expensive to borrow and invest, the fed has been working to slow the overall demand in the economy and thus reduce upward price pressure.