The Federal Reserve decided this Wednesday to proceed with interest rates at 5.5% and stop the increases made last year. Of course, Fed Chairman Jerome Powell explained during his speech that inflation “remains very high”, leaving the door open for further increases before the end of the year.
Therefore, for the second consecutive meeting, the Federal Open Market Committee (FOMC) at the United States Federal Reserve maintains interest rates at 5.5%, the highest since January 2001, after an increase of 5.25 points in one and a half years, with the goal of “achieving maximum employment and inflation at a rate of 2% in the long term,” announced the US central bank.
In this way, the institution decided to keep its monetary policy unchanged for the second time; after July, it made another 25 basis points increase in the price of money. The Fed’s decision comes after it was revealed last week that the world’s largest economy grew more than expected during the third quarter, when it registered an expansion of 1.2% compared to the second quarter, when the GDP grew by 0.5%.
For its part, the interannual inflation rate stood at 3.7% in September, repeating the increase in August, while the underlying rate, which does not include the effect of volatility in food and energy prices, reached 4.1%, two tenths lower than in August.
Likewise, the personal consumption expenditure price index, the Fed’s preferred statistic, remained at 3.4% year-on-year in September, unchanged since August, while the underlying data closed the ninth month of 2023 with an increase of 3.7%, a tenth lower than the previous month.
In this sense, the Fed noted that recent indicators suggest that economic activity “expanded at a strong pace in the third quarter,” adding that employment growth has moderated since the beginning of the year but remains stable and the unemployment rate remains low.
In the coming weeks, the central bank will continue to monitor economic indicators and forecasts to make the next decisions, especially in light of the labor market and some inflation.