The Federal Reserve decided to maintain its benchmark interest rate within a range of 4.25% to 4.5% during its latest policy meeting on Wednesday, extending a pause in rate hikes initiated in January.
The decision, widely anticipated by market analysts, reflects an assessment of recent economic indicators. While fluctuations in net exports have impacted data, the Federal Reserve indicated that the overall economic trajectory remains robust.
The central bank highlighted the continued strength of the labor market, noting a persistently low unemployment rate and positive labor conditions. Inflation remains elevated, prompting the Fed to carefully monitor potential risks affecting both its employment and price stability goals – aiming for maximum employment and a 2% inflation rate.
In a statement, the Federal Reserve reiterated its readiness to adjust monetary policy should risks emerge that hinder the achievement of the Committee’s objectives. Decisions will be guided by a comprehensive evaluation of incoming data, including indicators related to the labor market, inflationary pressures and inflation expectations.
Generally, higher interest rates tend to moderate inflationary pressures but can negatively impact equity markets. Conversely, lower rates have the potential to exacerbate inflationary trends.