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US inflation holds on as Federal Reserve decides to keep rates at current levels

The White House says a primary driver of economic growth is consumer spending.
Posted at 2:50 PM, May 01, 2024
and last updated 2024-05-01 15:50:33-04

The U.S. Federal Reserve released its latest decision on rates, saying the U.S. central bank will keep rates at their current levels for now as inflation continues to take a toll on American spending.

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The central bank said on Wednesday that recent economic indicators "suggest that economic activity has continued to expand at a solid pace." Employment has remained strong as well, according to the Fed. The statement said inflation has remained elevated over the past year, and there hasn't been much progress in easing inflation. The Fed said it would keep the target federal funds rate at 5.25% to 5.5%.

The White House saysa primary driver of economic growth is consumer spending, and experts say it could be older Americans who have benefited from outsize gains in the housing and stock market who are causing some of the slowdown in a lowering of rates by the Fed, The Associated Press reported.

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Those outcomes appear to be revealing themselves in the form of increased spending on discretionary travel. The website Skift noted a perceived travel boom continuing this year in terms of luxury travel. The analysis firm Research and Markets said a shift towards remote work and hybrid work after the pandemic could also be a cause for a higher demand for high-end accommodations.

On Wednesday the U.S. Federal Reserve called the country's economic outlook "uncertain" and said it would remain "highly attentive" to the risks of inflation.