NYReaders - The US Federal Reserves decided to hold interest rates unchanged for January as the US inflation rate continued to ease in early of the year from its highest last year.
Federal Reserve chair Jerome Powell said in a press conference that recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low.
“Inflation has eased over the past year but remains elevated,” he said.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance, he said.
However, the economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.
“In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent,” he said.
“In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” he added.
He indicated that The Fed may change its monetary stance depending on the inflation rate trend.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” he said.
The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Federal Reserves has held rates between 5.25% and 5.5% since July last year. The central bank appears to keep a delicate balance, indicating that it won’t rush to hike the rates.
The US inflation has weakened over the past few months. The consumer price index, which peaked above 9% in June 2022, stood at 3.4% in December, according to official data. But many Americans are still grappling with the heightened cost of living, and price growth remains above the Fed’s 2% target. (*)