The Fed’s decision to keep its key interest rate between 5.25% and 5.50% gives policymakers time to “assess additional information and its implications for monetary policy,” the central bank said in a statement. The decision was widely expected, given the Fed’s stated goal of slowing inflation to its long-term goal of 2%, BGNES reported.
It marks the first time officials have held interest rates steady for two consecutive meetings since they began tightening monetary policy last year.
The U.S. central bank said any future rate-tightening decisions would “take into account the cumulative tightening of monetary policy, the time lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
Inflation has more than halved since peaking above 7% in June last year, although it remains firmly above 3%.
When the Fed raises interest rates, it raises the cost of bank loans, which should dampen economic activity and weaken the labor market.
But despite the aggressive tightening of monetary policy, the Fed noted that “economic activity expanded at a strong pace in the third quarter.”
Job growth continues to be strong and the unemployment rate remains low, he added.
The Fed’s move is likely to reinforce expectations that it is done raising interest rates and is moving into an extended pause.