The Fed once again holds interest rates steady — with cuts expected later this year

The Federal Reserve announced interest rates will remain unchanged, staying in line with Powell's remarks that more data is needed before any cuts.

• The Federal Reserve held interest rates steady in its latest decision on Wednesday.
• Powell has maintained that the Fed needs more data before it can cut interest rates.
• That means that relief likely will not come until the second half of the year.

The nation's central bank offered no surprises in its latest interest rate decision.

On Wednesday, the Federal Open Market Committee announced that it would be holding interest rates steady, continuing the pause on rates that began in September. It's further proof that the Federal Reserve is waiting for more economic data to ensure confidence that the economy is moving in the right direction before implementing any rate cuts.

While the FOMC projected three interest rate cuts for 2024, inflation is not quite where the Fed needs it to be. The Consumer Price Index, which measures inflation, rose 3.5% year-over-year in March, a slight increase from the 3.2% year-over-year reading in February.

Even with a strong labor market, Fed Chair Jerome Powell said the Fed has more work to do to get closer to its 2% inflation target — meaning rates could stay higher for longer than Americans might have hoped.

"The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence," Powell said during a panel discussion in Washington in April.

This means that rate cuts could likely pushed back to the second half of the year, potentially coinciding with the presidential election in November. This timing has sparked criticism from former President Donald Trump, who accused Powell in a February interview with Fox News that rate cut timing would "help the Democrats."

"It looks to me like he's trying to lower interest rates for the sake of maybe getting people elected," Trump said. The Wall Street Journal also recently reported that some members of Trump's team are crafting a plan that would give Trump a say in interest rate decisions, along with the authority to oust Powell from his position.

Powell maintained that the Fed is not political and makes decisions based solely on economic data.

"Our analysis is free from any personal or political bias, in service to the public," Powell said during an April discussion. "We will not always get it right — no one does. But our decisions will always reflect our painstaking assessment of what is best for our economy in the medium and longer term — and nothing else."

Regardless of whether rate cuts coincide with the election, data will be key going forward — and while predictions could change in the coming months, the central bank will likely move slowly on any interest rate relief this year.

"Inflation has continued to run hot and there is no compelling need for the Fed to cut interest rates until they're comfortable with where inflation is headed," Greg McBride, chief financial analyst for Bankrate, said in a statement.