• Monday, April 22, 2024
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BusinessDay

US Fed holds interest rate for fifth straight time

Global stocks slide on gloomy US economic outlook

The US Federal Reserve announced its decision to hold its key interest rate at the 5.25 percent to 5.5 percent range, leaving it unchanged for the fifth straight meeting.

This decision was made after the two-day Federal Open Market Committees meeting Wednesday.

“US inflation has eased substantially while the labour market remains strong, but inflation is still too high” Jerome Powell, Federal Reserve Chair said

This is after the US inflation increased to 3.2 percent in February compared to 3.1 percent in January.

Powell said the ongoing progress in bringing it down is not assured, and the path forward is uncertain.

The Fed in a statement said the committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward two percent.

“In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective,” the Fed said in its statement.

Though the US Federal Reserve officials still expect to make 0.75 percentage points worth of interest rate cuts this year, signaling confidence that inflation is cooling sufficiently to reduce borrowing costs.

Nine of the Fed’s 19 policymakers see three quarter-point rate cuts this year, and nine see two or less. Only one penciled in more cuts than the median, compared with five in December.