By Howard Schneider and Lindsay Dunsmuir

January 31, 20242:02 PM ESTUpdated a min ago

WASHINGTON, Jan 31 (Reuters) – The Federal Reserve left interest rates unchanged on Wednesday but took a major step towards lowering them in coming months in a policy statement that tempered inflation concerns with other risks to the economy and dropped a longstanding reference to possible further hikes in borrowing costs.

The U.S. central bank’s latest policy statement gave no hint that a rate cut was imminent, and indeed said the policy-setting Federal Open Market Committee “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” the Fed’s inflation target.

Read More: Fed holds rates steady, says more ‘confidence’ needed in inflation slowdown before cuts | Reuters