- The Federal Reserve announces that the interest rate will remain unchanged at 5.25% to 5.5%.
- Chair Jerome Powell narrates the interest rate’s strong influence on cooling inflation and the reduced unemployment rates.
- Powell hints at the potential modifications in the rate if risks emerge against the Fed’s expectations.
Federal Reserve Chairman Jerome Powell announced the board’s decision to hold the interest rates unchanged at a 23-year high following a two-day Federal Open Market Committee (FOMC) meeting.
Though economists speculated an interest relaxation, the Fed declared that the rate would remain unchanged at 5.25% to 5.5%, considering its significant impact on cooling inflation. In a press release, the Fed asserted that the past year has exhibited strong job gains and lower unemployment rates, along with the easing of inflation. The Fed highlighted in a statement,
“Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”
In a previous FOMC meeting, the Fed hinted at the potential interest rate cuts in 2024, signaling their intention to reduce interest rates three times in the year. Recently, while reports indicated a possible rate cut in June, JPMorgan CEO Jamie Dimon recommended the Fed wait past June, hinting at an impending global recession.
While the pace of the inflation rate decline is unsatisfactory, it casts a shadow over the Fed’s potential decisions over the interest rate cut. The Fed cited, “We believe that our policy rate is likely at its peak for this type of cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”
The Fed added that they would continue to assess the economic outlook and the influence of the interest rates on the global economy. The committee would modify the monetary policy as appropriate “if risks emerge that could impede the attainment of the Committee’s goals.”
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