The US Federal Reserve decided to keep its key interest rate unchanged at 3.5%-3.75%, citing solid economic activity, low job gains, and elevated inflation. The FOMC remains attentive to risks and committed to its dual mandate of employment and 2% inflation.
The US Federal Reserve has decided to keept its benchmark federal funds rate unchanged at 3.5%-3.75%. According to an official press release on Wednesday, the Fed said, “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.”
Dual Mandate and Economic Uncertainty
The central bank reiterated its dual mandate to achieve maximum employment and inflation at 2% over the longer run, adding that uncertainty about the economic outlook remains elevated. “The implications of developments in the Middle East for the US economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate,” it said.
Future Policy Considerations
In supporting its goals, the Fed decided to maintain the current target range for the federal funds rate. The statement added, “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”
The Federal Reserve also highlighted that it would continue monitoring economic indicators, including labour market conditions, inflation pressures, financial developments, and global events, and is prepared to adjust monetary policy if risks arise that could impede its objectives.
“In assessing the appropriate stance of monetary policy, the Committee 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 labor market conditions, inflation pressures and inflation expectations, and financial and international developments,” a release added.
FOMC Vote Breakdown
The members of the Federal Open Market Committee (FOMC) who voted in favour of maintaining the current rates included Chair Jerome H Powell and Vice Chair John C Williams. Only one member, Stephen I Miran, voted against the decision, preferring a 0.25 percentage point cut in the federal funds rate.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Beth M. Hammack; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; Anna Paulson; and Christopher J. Waller.
Dissenting Vote
Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting. (ANI)
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