The Federal Reserve is leaving its benchmark interest rate unchanged as policy makers wait for more evidence that inflation is back on track as the economy cools. 

Members of the Federal Open Market Committee, the central bank’s rate-setting panel, said in a policy statement on Wednesday that they will hold the federal funds rate in a range of 5.25% to 5.5%, leaving it at its highest level in 23 years. The Fed’s announcement, which was widely expected by investors, means the federal funds rate has been parked at that level since July 2023, when the central bank last raised rates. 

Although Fed officials had telegraphed their intent to stand pat, Wall street analysts are keenly watching for any signals from the central bank that is could cut rates at its next meeting, which will be held from September 17-18. About 9 in 10 economists have penciled in the September meeting for the Fed’s first rate cut since 2020, pointing to inflation that is easing faster than expected. 

Some on Wall Street still project that the Fed could announced two additional cuts later in 2024, although the central bank has projected just one reduction this year.

“While the moderation in U.S. data has helped fuel market optimism around Fed cuts, the number of cuts still remains a question mark, with U.S. elections adding to uncertainty,” TD Securities analysts said in a July 26 research note.

A growing concern is the nation’s labor market, which is showing signs of fading. Job growth has slowed to an average 177,000 a month for the past three months, compared with a three-month average of 275,000 a year ago. 

The July jobs report will be released on Friday, with economists forecasting payroll gains of 175,000 this month and the unemployment rate holding steady at 4.1%, according to financial data service FactSet.

Fed officials have said they are seeking to balance the need to keep rates high enough to quash inflation with avoiding a recession. The Fed’s dual mandate is to keep prices stable to ensure maximum employment. 

At the Fed’s June meeting, Chair Jerome Powell said the central bank is closely monitoring the jobs data, underlining that officials are aware of the risk if they wait too long to cut rates.

But, he added, the bank sees “gradual cooling — gradual moving toward better balance. We’re monitoring it carefully for signs of something more than that, but we really don’t see that.”