The Federal Reserve, the US central bank, has maintained its federal funds target rate at a range of 4.25 to 4.5 percent, the bank announced on Wednesday. This decision extends the pause in interest rate changes, which began in January.
The move was widely anticipated and market attention is now focused on the central bank’s reasoning. Initially, the bank cited uncertain economic prospects in January, but on this occasion, it stated that the uncertainty has increased. The bank is paying close attention to the risks on both sides of the dual mandate, aiming to achieve the maximum level of employment and a two percent inflation rate in the long term.
Again, the bank emphasized its readiness to adjust its monetary policy course if risks emerge that could hinder the achievement of its goals. In doing so, the bank will consider a broad range of information, including labor market indicators, inflation pressure and inflation expectations.
High interest rates typically curb general inflation, but are detrimental to the stock market. On the other hand, low interest rates can fuel inflation.