CoM | The US Federal Reserve (Fed) decided on Wednesday to pause interest rate hikes and keep them in a range of between 5 and 5.25%, after a historic round of ten consecutive rate hikes since March 2022.
“Recent indicators suggest that economic activity has continued to grow at a moderate pace. Employment growth has been solid in recent months and the unemployment rate has remained low,” the agency said in a statement released on Wednesday afternoon.
The Fed, which has raised its policy rate by 500 basis points in this tightening cycle, has left the door open to further rate hikes given the resilience of the Fed’s monetary policy stance.
The Fed, which has raised its policy rate by 500 basis points in this tightening cycle, has left the door open to further rate hikes given the resilience of the economy, particularly the labour market.
Data since the last Fed meeting in early May have given policy makers a number of signals that have prompted economic leaders to act.
Inflation in May was 4%
After the year-on-year rate of inflation in the United States continued to fall for the eleventh consecutive month and stood at 4% in May, nine tenths of a percentage point lower than in April, the regulator has decided to pause its policy of increases for the first time in almost a year and a half.
Despite this, the figure is still double the 2% target set by the Fed and the reason why the agency justified the hikes that reached record highs not seen since 2007.
Since reaching its peak of 9.1% in June 2022, the inflation rate has been progressively falling, among other things, due to lower energy prices and rate hikes to cool the economy.
The rate hikes are, however, not having a noticeable effect on the employment rate.
