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US Fed maintains interest rates unchanged within range of 5.25 percent-5.5 percent
(MENAFN) On Wednesday, the US Federal Reserve decided to maintain its federal funds rate within the target range of 5.25 percent-5.5 percent, the highest level in 23 years. This decision was in line with market expectations and marks the fifth time this year that the Fed has opted to forgo a rate hike, following four previous pauses in 2023.
In its statement, the Fed noted "some further progress" towards achieving its 2 percent inflation target, a shift from the "modest further progress" described in the June statement. This change reflects an improved outlook on inflation but acknowledges that it remains "somewhat elevated." The Fed also observed that job gains have moderated and the unemployment rate has increased slightly, though it remains low. This contrasts with the June statement, which highlighted strong job gains and a stable low unemployment rate.
The decision to keep rates unchanged was unanimous, with all 12 members of the Federal Open Market Committee (FOMC) voting in favor. The FOMC reiterated that it does not expect to lower the target range until there is greater confidence that inflation is sustainably moving towards its 2 percent goal. This approach follows a series of rate increases aimed at combating inflation, which peaked at 9.1 percent in June 2022 before significantly dropping to 3 percent by June 2023.
The Fed's last rate hike occurred on July 26 of the previous year, when it increased rates by 25 basis points. From March 2022 to July 2023, the central bank raised rates by a total of 525 basis points to address record-high inflation. The consumer price index (CPI), which tracks changes in the prices of goods and services, rose 3 percent annually in June 2023, slowing from the 3.3 percent increase recorded in May.
In its statement, the Fed noted "some further progress" towards achieving its 2 percent inflation target, a shift from the "modest further progress" described in the June statement. This change reflects an improved outlook on inflation but acknowledges that it remains "somewhat elevated." The Fed also observed that job gains have moderated and the unemployment rate has increased slightly, though it remains low. This contrasts with the June statement, which highlighted strong job gains and a stable low unemployment rate.
The decision to keep rates unchanged was unanimous, with all 12 members of the Federal Open Market Committee (FOMC) voting in favor. The FOMC reiterated that it does not expect to lower the target range until there is greater confidence that inflation is sustainably moving towards its 2 percent goal. This approach follows a series of rate increases aimed at combating inflation, which peaked at 9.1 percent in June 2022 before significantly dropping to 3 percent by June 2023.
The Fed's last rate hike occurred on July 26 of the previous year, when it increased rates by 25 basis points. From March 2022 to July 2023, the central bank raised rates by a total of 525 basis points to address record-high inflation. The consumer price index (CPI), which tracks changes in the prices of goods and services, rose 3 percent annually in June 2023, slowing from the 3.3 percent increase recorded in May.

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