The Federal Reserve maintains the rate at 5.25-5.5%, as the market expected

The Federal Reserve keeps the key rate unchanged, aiming to reduce inflation and support employment

Federal Reserve / Dan Smith, CC BY-SA 2.5

On Wednesday, the Federal Open Market Committee (FOMC) announced its decision to keep the federal funds rate at 5.25-5.5% per annum, unchanged since July last year.

This was a unanimous vote by FOMC members, which matched expert expectations.

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The official statement emphasizes sustained economic activity growth, high employment levels, and low unemployment rates.

However, despite the inflation decrease over the past year, it remains elevated.

The Federal Reserve reaffirmed its commitment to reducing inflation to 2% and stated its readiness to adjust monetary policy as necessary, based on incoming economic information and changes in economic outlooks.

The Fed will also continue reducing its asset holdings according to the previously announced plan.

The disappearance of mentions of a slowdown in job growth from the statement was noticeable, indicating a change in labor market perception.

The FOMC also emphasized that it would carefully assess the impact of external and internal events on achieving its long-term goals.

The U.S. stock market and the currency market reacted positively to this decision.

FOMC reports mention that there could be three rate cuts in 2024, although some economists had anticipated only two cuts.

Previously, Janet Yellen expressed doubts about whether U.S. interest rates could return to pre-pandemic levels, pointing to inflation and rising bond yields as the main obstacles.

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