The US Federal Reserve has kept its key interest rate in a range of 4.25 to 4.5 percent, the central bank announced on Wednesday. This is the first rate hold after three consecutive cuts.
The decision was widely expected and investors are paying close attention to the Fed’s explanations. While the central bank mentioned in its last rate decision in December that it would “review the scope and timing of further adjustments” this time it simply stated that it is prepared to adjust its monetary policy course “if risks emerge that could impede the achievement of the committee’s goals.”
The Fed will “take into account a broad range of information, including data on the labor market, inflation pressure and inflation expectations” in its assessments. The central bank reiterated its long-term goal of bringing inflation to two percent.
High interest rates typically curb inflation, but are bad for the stock market. On the other hand, low interest rates fuel inflation.