US Fed keeps interest rates unchanged at 4.25-4.50 pc amid rising unemployment, inflation risks

NEW DELHI: The US Federal Reserve has decided to keep interest rates unchanged at 4.25 per cent to 4.50 per cent, as the risks of both higher unemployment and rising inflation have increased. The Federal Open Market Committee (FOMC) meeting, held on Wednesday local time, took the decision after reviewing the latest economic data.

The Fed, in a statement, said, “The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen. In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 per cent.”

It also noted that recent indicators suggest that the US economy continues to grow at a solid pace, even though changes in net exports have influenced the data. The job market remains strong, with the unemployment rate staying low in recent months. However, inflation is still somewhat high and above the Fed’s target of 2 per cent.

To support these goals, the Fed decided not to change the federal funds rate at this time. The Committee also said it will continue to reduce its holdings of Treasury securities and mortgage-backed securities.

Looking ahead, the Fed said it will carefully watch new economic data to decide when and how to adjust interest rates in the future. The central bank is ready to change its policy if needed, depending on how the economy performs. The Fed will consider various factors such as labor market conditions, inflation trends, financial markets, and global developments while making future decisions.

All members of the Committee, including Fed Chair Jerome Powell and Vice Chair John Williams, voted in favor of the decision. Neel Kashkari participated as an alternate member in this meeting. The Fed also added that it remains committed to bringing inflation down to 2 per cent while supporting a strong labour market. For now, it is holding steady as it watches how the economy evolves. (ANI)