The decision, justified by the United States central bank due to the lack of progress in inflation, was expected by the market. From June onwards, it will slow down the pace of reducing the debt it has on its balance sheet.
Interest rates in the United States will remain unchanged for the tenth consecutive month. The decision – which was taken this Wednesday by the North American Federal Reserve (Fed) and remains in line with market expectations – is justified by the lack of progress in inflation.
“Recent indicators suggest that economic activity continued to expand at a solid pace. Job creation remained strong and the unemployment rate remained low. Inflation has slowed down in the last year, but remains high. In recent months, there has been no new progress towards the Committee’s 2% inflation target“, indicates the Fed in a statement.
Analysts expected that the evolution of the economy, associated with the consumer price index – in March, headline inflation recovered 0.3 percentage points to 3.5% and underlying inflation remained at 3.8% – give the Fed strength to stay the course.
That is what happened. After a two-day monetary policy meeting, the Federal Open Market Committee (FOMC) decided that the federal funds rate range remains between 5.25% and 5.5%. It is the highest value in two decades.
“When considering any adjustments to the target range for the federal funds rate, the Committee will carefully evaluate the data received, the evolving outlook, and the balance of risks. The Committee does not expect it to be appropriate to reduce the target range until you have gained greater confidence that inflation is moving sustainably towards 2%“, he reaffirms.
In addition to interest, Fed policymakers have decided to continue reducing the amount of Treasury bonds and agency debt securities and agency mortgage-backed securities it holds.
But from June onwards it will slow down the pace of reduction, cutting the limit on monthly Treasury repayments from US$60 billion to US$25 billion. In the case of the remaining bonds, it remains at 35 billion dollars, and it will also reinvest any capital payments that exceed this limit in Treasury bonds.
“The Committee is strongly committed to returning inflation to its 2% target. When assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of the information received for the economic outlook. The Committee will be prepared to adjust the stance of monetary policy, as appropriate, if risks arise that could impede the achievement of the Committee’s objectives,” it adds.
(News updated at 19:10)
Tags: Fed interest rates unchanged tenth month Interest rates
