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US Federal Reserve Keeps Interest Rates Steady At 5.25-5.50%: Here’s All You Need To Know – News18

US Federal Reserve Keeps Interest Rates Steady At 5.25-5.50%: Here’s All You Need To Know – News18


The US Federal Reserve says FOMC seeks to achieve maximum employment and inflation at the rate of 2 per cent over the longer run.

It is the first time officials have held rates steady at two consecutive meetings since they began tightening monetary policy last year

In its latest move, the US Federal Reserve kept the interest rates unchanged at a 22-year high for a second straight meeting. It is the first time officials have held rates steady at two consecutive meetings since they began tightening monetary policy last year. Here’s all you need to know:

The Fed’s decision to keep its benchmark lending rate between 5.25 per cent and 5.50 per cent gives policymakers time to “assess additional information and its implications for monetary policy”, the central bank said in a statement.

What US Fed Said

On the economy, the US Fed said recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated.

On banks, the central bank said the US banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

On rate status quo, the US Fed said the Federal Open Market Committee (FOMC) seeks to achieve maximum employment and inflation at the rate of 2 per cent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 per cent.

On future decisions, it said the FOMC will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 per cent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.

The FOMC will continue reducing its holdings of treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 per cent objective

On monetary policy stance, the US Fed said that in assessing the appropriate stance of monetary policy, the FOMC will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.

The Committee’s assessments will take into account a wide range of information, including readings on labour market conditions, inflation pressures and inflation expectations, and financial and international developments.



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