Fed maintains US interest rates in the range of 5.25% to 5.50% per year

[ad_1]

Benchmark remained unchanged for the second consecutive meeting. The country’s interest rates remain at the highest level since 2001. Headquarters of the Federal Reserve (Fed), US Central Bank. REUTERS/Joshua Roberts The Federal Reserve (Fed, the central bank of the United States), kept the country’s interest rates unchanged this Wednesday (1st), in a range of 5.25% to 5.50% per year. This remains the highest rate level since 2001. The decision was already expected by the market and came after the committee maintained the same benchmark at the last meeting, in September. In an interview with journalists after the decision was released, Fed President Jerome Powell stated that the institution is not thinking about reducing the basic interest rate at this time. “The issue of interest rate cuts simply doesn’t come up,” he said. “It’s fair to say the question we’re asking is whether we should increase further.” In a statement, the Federal Open Market Committee (Fomc) reported that recent indicators suggest that the country’s economic activity advanced at a strong pace in the third quarter. The statement represents an update compared to the last statement, in September, when the collegiate attributed growth to the North American economy at a “solid pace”. The United States’ gross domestic product (GDP) advanced at an annual rate of 4.9% in the third quarter, the biggest advance since 2021. “Employment gains have been moderate since the beginning of the year but remain strong, and the rate unemployment remained low. Inflation remains high”, the collegiate said in a statement. The Fed has been closely monitoring the job market and its impact on inflation. In practice, a heated market generates more job openings, more hiring and salary increases — which tends to inject more money into the economy and, thus, increase inflation. “The committee seeks to achieve the maximum level of employment and bring inflation to a rate of 2% in the long term”, continued the FOMC in the statement, highlighting that, in determining “the extent of additional reinforcement” that may be appropriate to achieve these objectives , will take into account: the cumulative tightening of monetary policy; the lag in the effects of interest rate increases on economic activity and inflation; and economic and financial factors. “In addition, the Committee will continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities as outlined in its previously announced plans,” he added. Fed President Jerome Powell at a press conference following the US interest rate decision. Kevin Lamarque/Reuters Jerome Powell also told reporters that market credit costs need to remain at persistently higher levels to influence the Fed’s future monetary policy choices. According to the central banker, however, “not yet It is not known if this will be the case. Finally, the FOMC statement once again reinforced that the US banking system is “solid and resilient”, and stated that more restrictive credit conditions for companies and families “could weigh on economic activity, hiring and inflation “. “The extent of these effects remains uncertain. The Committee remains very attentive to the risks of inflation”, concluded the note. Reflections on North American interest rates Interest rates still at high levels in the United States increase the profitability of Treasuries (North American public bonds) and should continue to be reflected in the stock markets and the dollar, with the increasing migration of investors to the country, in search of better remuneration. In the macroeconomic scenario, the effects of high interest rates in the United States are also reflected in the long term, indicating a trend of global economic slowdown, as loans and investments also become more expensive. In Brazil, investors continue to wait for the decision of the Monetary Policy Committee (Copom) of the Central Bank of Brazil (BC), which should be released this Wednesday. Most of the market is betting on a further reduction in the basic interest rate (Selic), by 0.50 percentage points, to 12.25% per year.

[ad_2]

Source link