The United States Federal Reserve (Fed) decided this Wednesday to maintain interest rates in a range between 5.25% and 5.50%, the maximum in the last 23 years, waiting for the inflation stabilizes at the domestic level in the North American country.
After its first two-day meeting of 2024, the Federal Open Market Committee (FOMC) established the continuity of the current range of rates and stated in a statement that “it does not see a need for an interest rate cut”, at least until “the inflation stay close to your 2% target” on an annual basis.
This is the fourth consecutive time that the Fed decides to keep its interest rate policy stable, stressing that “in considering any adjustment to the target range for the federal funds rate, the FOMC will carefully evaluate the incoming data,” as well as “the evolving outlook and balance of risks.” .
Furthermore, the FOMC noted that it “does not expect it to be appropriate to reduce the target range until it has gained greater confidence that the inflation is moving sustainably toward 2%” and that it “will continue to reduce its holdings of securities of the (Treasury Department and agency debt and agency mortgage-backed securities” in its inflation targeting.
Future outlook for US monetary policy
In its statement, the Fed maintains that “they remain very attentive to inflation risks”, something that could mean a hard blow to investors who expected rate cuts to begin in March.
He Fed Chairman Jerome Powell, asserted that he does not believe it is likely that the committee will reach “a level of confidence at the March meeting” to consider a rate cut. However, he also indicated that “that remains to be seen” in the coming days.
Apparently, the authorities of the Fed have a long way to go in the quest to achieve a “soft landing” of the economy, at a time when the inflation continues to fall, and both employment and growth remain practically intact. “We are not declaring victory,” she noted.