The Federal Reserve has once again kept its benchmark interest rate steady as it balks at the cooling of U.S. inflation.
At the conclusion of its most recent meeting on Wednesday, the Fed’s Open Market Committee consensus voted to keep the U.S.’ benchmark rate at 2.25%-2.5%, a rate that has been level since December 2018 when the central bank increased borrowing costs for the fourth time in 2018.
The latest decision comes as central bankers appear to be booking larger losses over their unwavering 2% annual inflation goal. Data released by the Labor Department this past month showed the annual rate of inflation dropping to 1.7% in April, its lowest level since January.
The Fed has continued to cite worries over an economic slowdown as the main reason for its degree of inaction. In a statement, officials wrote that the current moderate pace of economic activity and inflation winded down some of the labour market’s strength.
Chairman Jerome Powell has been vocal in stressing the importance of a patience approach in the future. “My colleagues and I agree that our current policy stance is appropriate and the stance, unless something material changes, is likely to remain appropriate for some time.” said Powell during a press conference following the committee’s meeting.
Investors respond positively to the Fed’s decision, with the S&P 500 seeing its biggest single-day gain Wednesday since January after the announcement. The benefits of lower borrowing costs for American households, however, has remained much more limited.
The Fed’s inflation forecasts show that the central bank now anticipates that price levels will remain below its 2% stability target until 2021. Despite these subdued expectations, many economists remain confident that it may not take years for the U.S. economy to reach back to reaching its long-term goals.
The Federal Reserve has once again kept its benchmark interest rate steady as it balks at the cooling of U.S. inflation.
At the conclusion of its most recent meeting on Wednesday, the Fed’s Open Market Committee consensus voted to keep the U.S.’ benchmark rate at 2.25%-2.5%, a rate that has been level since December 2018 when the central bank increased borrowing costs for the fourth time in 2018.
The latest decision comes as central bankers appear to be booking larger losses over their unwavering 2% annual inflation goal. Data released by the Labor Department this past month showed the annual rate of inflation dropping to 1.7% in April, its lowest level since January.
The Fed has continued to cite worries over an economic slowdown as the main reason for its degree of inaction. In a statement, officials wrote that the current moderate pace of economic activity and inflation winded down some of the labour market’s strength.
Chairman Jerome Powell has been vocal in stressing the importance of a patience approach in the future. “My colleagues and I agree that our current policy stance is appropriate and the stance, unless something material changes, is likely to remain appropriate for some time.” said Powell during a press conference following the committee’s meeting.
Investors respond positively to the Fed’s decision, with the S&P 500 seeing its biggest single-day gain Wednesday since January after the announcement. The benefits of lower borrowing costs for American households, however, has remained much more limited.
The Fed’s inflation forecasts show that the central bank now anticipates that price levels will remain below its 2% stability target until 2021. Despite these subdued expectations, many economists remain confident that it may not take years for the U.S. economy to reach back to reaching its long-term goals.
