Fed Holds Steady on Interest Rates

The Federal Reserve today agreed to hold its benchmark interest rate steady and hinted that rates will remain on hold through next year amid persistently low inflation. Following three consecutive cuts earlier this year, the central bank will keep interest rates in a target range of 1.5%-1.75%.

The Fed noted that the U.S. labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.

On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent and market-based measures of inflation compensation remain low.

According to a press release:

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1‑1/2 to 1-3/4 percent.

The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective. The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Stay tuned to Conduit Street for more information.

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