adminThe U.S. Federal Reserve has held its benchmark lending rate steady for the second consecutive time, signifying a pause in its ongoing rate-hiking campaign initiated in March last year. The decision was announced at the conclusion of its two-day policy meeting on Wednesday. The short-term federal funds rate remains within the 5.25% to 5.5% target range, a level not seen in 22 years.
Fed Chair Jerome Powell emphasized that achieving sustainable inflation below the 2% target is a long-term goal. He also indicated that two additional jobs and inflation reports will be taken into account before the year-end meeting in December. This comes amidst an environment of strong Q3 growth, moderated job gains, and low unemployment.
The Federal Open Market Committee (FOMC) issued a warning about potential impacts on economic activity, hiring, and inflation due to tighter financial and credit conditions. Despite this, ambiguity remains over whether the current lending rate will be maintained at the upcoming FOMC meeting in December.
Industry experts from Orion Portfolio Solutions, Goldman Sachs Asset Management, TradeStation, BOK Financial, Banrion Capital Management, Crewe Advisors, REX Shares, and Key Private Bank provided insights into the Fed’s decision. They underscored the importance of monitoring labor market and inflation data closely. They also highlighted how higher long-term interest rates could potentially mitigate further rate hikes despite strong economic growth and above-target inflation. A ‘soft landing’ scenario was also suggested as a possibility.
The Federal Reserve’s rate-hiking campaign was launched as part of their strategy to bring down inflation to a 2% target. However, with the lending rate now at a 22-year high and held steady for a second time, there appears to be readiness for policy adjustments if necessary.
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