The United States Federal Reserve Open Market Committee (FOMC) has maintained an interest rate range of 5.25%-5.50%.
Interest Rate Kept in the 5.25% to 5.5% Range
The Fed Reserve voted to keep the interest rate unchanged, keeping the interest rate standing at a 22-year high. At the same time, the door is left open for a surge in borrowing costs, according to a policy statement that acknowledged the U.S. economy’s surprising strength. Meanwhile, it also nodded to the tighter financial conditions faced by businesses and households.
“Economic activity expanded at a strong pace in the third quarter,” the U.S. Federal Reserve noted. The recent rate decision also gives policymakers time to “assess additional information and its implications for monetary policy.”
On the other hand, there are some speculations that the pause in the hike of interest rates may be the birth of a stronger hike in the future. Financial conditions are tightening on their own and this points to a stronger-than-expected economy and labor market, a trend that underscores the possibility of future hikes.
Historic Monetary Tightening
It is worth noting that the United States has been on an aggressive push per its interest rate hike policy since March 2022.
However, this is the first time that the officials held the interest rate at a steady range for two consecutive meetings. In the September 20, 2023 meeting, the FOMC revealed its plans to keep the benchmark federal funds rate steady at the current target rate of 5.25-5.50%
At the time, it was said that “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.”
About two weeks ago, the Fed Reserve Chair Jerome Powell hinted at the possibility of not having any other additional rate hike. Based on a Coingape report, Powell suggested that if the recent progress on inflation continues and long-term Treasury yields remain elevated, the central bank may keep up with the pause of its historic series of interest rate hikes.
Meanwhile, the crypto market is almost non-reactive to the news as Bitcoin’s (BTC) price remains pegged at $34,682.19 atop a 0.20% surge.
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