The United States Federal Reserve (Fed) announced this Wednesday that it maintains interest rates, the second consecutive break after eleven increases since March last year, but did not rule out raising them again if the situation requires it.
“The Committee will continue to evaluate additional (economic) information” to “determine the scope of further policy tightening,” said the US central bank, which decided to maintain rates at the current range of 5.25% and 5.5%, its highest level since 2001.
For now, the extent of the effects of the rate hike “remains uncertain,” the Fed added, insisting that the committee “will be prepared to adjust the stance of monetary policy as appropriate if there are any risks that prevent achievement.” of the purposes” of returning the inflation to 2%.
It is possible, therefore, that the Fed makes some increase in the meetings it has before the end of the year, on December 12 and 13.
As at the end of each meeting, the Fed said in its statement that the Federal Open Market Committee (FOMC) will continue to evaluate the economic data released in the coming weeks and the effects of monetary policy on them.
The tone used by the president of the Fed, Jerome Powell, in a press conference is important to determine whether there will be more hikes soon and to determine how long rates will remain as high as they are now, with a number that doesn’t exist yet. seen since 2001.
Recent economic indicators, the Fed said, suggest “that economic activity increased at a strong pace in the third quarter,” while “employment growth has slowed since the beginning of the year but remains stable” and “inflation remains high.”
“Tighter financial and credit conditions for households and businesses are likely to affect economic activity, hiring, and inflation,” the Reserve said.
Until June of this year, in all their meetings since the series of increases began, the members of the FOMC, the body in charge of deciding whether or not to raise rates, decided to raise them.
After stopping in June, they increased it again in July, and in September, they chose to stop the increase.
This pause occurs in a complex context for inflation. After a series of more than a year of decline from the peak of 9.1% reached in June 2022, prices registered an increase of five tenths in August to 3.7%, the second consecutive increase, and remained at the same figure as in September.
However, the annual rate of core inflation, which measures the increase in prices without consideration of energy or food and is one of the indicators on which the Fed focuses in making its decisions, fell two-tenths in September and confirmed the downward trend.
This also happened when the United States registered an unexpected rebound in its gross domestic product, which increased by 1.2% in the third quarter with an annual growth rate of 4.9%, according to data published last week at the Bureau of Economic Statistics (BEA).
Regarding the labor market, another of the key data points analyzed by the Fed to decide on a possible increase was that job creation in the month of September remained stable, with 336,000 net new jobs, and the rate remained stable at 3.8%.
