The Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) has decided to maintain interest rates for the sixth consecutive meeting in the target range of 5.25% to 5.5%, the highest since January 2001, as reported by the institution this Wednesday.
«The Committee decided to maintain the target range for the federal rate between 5.25% and 5.5%. In considering any adjustment to the target range for the rate, the Committee will carefully evaluate incoming data, the evolving outlook and the balance of risks,” the Fed’s governing body announced.
In this regard, the Committee has advised that it does not expect it to be appropriate to reduce the target range until you have gained greater confidence that inflation is moving sustainably towards 2%.
It has also stressed that to assess the appropriate stance of monetary policy it will continue to monitor the implications of incoming information for the economic outlook, adding that it would be prepared to adjust the stance of monetary policy as appropriate if risks arise that could impede the achievement of objectives. the objectives.
To address the escalating cost of living, the US central bank, led by Jerome Powell, raised interest rates eleven consecutive times between March 2022 and July 2023.
Last week, the US Department of Commerce’s Bureau of Economic Analysis reported that the personal consumption expenditure pricesthe Fed’s preferred statistic for monitoring inflation, was at 2.7% year-on-year in the month of March, two tenths more than in February.
On his side, the US gross domestic product (GDP) recorded in the first quarter of the year a 0.4% expansion, half the 0.8% growth of the fourth quarter of 2023, according to the first estimate published by the Department of Commerce’s Bureau of Economic Analysis. In annualized figures, the US economy between January and March advanced 1.6% compared to 3.4% in the previous three months.
With its decision this Wednesday to maintain rates, The Fed leaves the way free to the European Central Bank (ECB) to take the initiative in reversing the monetary cycleafter the ‘guardian of the euro’ has expressed his willingness to undertake a first rate cut in June if there are no surprises in the incoming data.
In this sense, The Governing Council of the ECB plans to meet again to discuss the monetary policy of the eurozone on June 6while the Federal Open Market Committee of the Fed will not do so until June 12.
