The Federal Reserve, the US central bank, has maintained its interest rate range of 4.25 to 4.5 percent, a decision widely anticipated by the market. The Federal Open Market Committee (FOMC) has extended its pause on interest rate adjustments, which began in January.
The “Dot Plot” a visual representation of the FOMC members’ expectations for the short-term development of the interest rate, suggests that the committee still foresees two rate cuts this year. The Fed’s explanation for the decision highlighted a decrease in economic uncertainty, which was previously increasing, but noted that it remains significant.
Despite the influence of fluctuations in net exports on the data, recent indicators point to the US economy continuing to grow at a solid pace, according to the Fed. The central bank emphasized the low unemployment rate and solid labor market conditions, as well as a slight increase in inflation.
The Fed will continue to monitor the risks for both sides of its dual mandate, which aims to achieve maximum employment and an inflation rate of two percent in the long term. The bank is prepared to adjust its monetary policy if risks arise that could hinder the achievement of its goals, taking into account a broad range of information, including labor market data, inflation pressure and inflation expectations.
High interest rates typically curb inflation, but are detrimental to stock markets, while low interest rates can fuel inflation.