The Federal Open Market Committee (FOMC), the body of the US Federal Reserve (Fed) that decides on the level of interest rates, during Wednesday's meeting decided to keep the cost of money unchanged. This means that until the next meeting, scheduled for mid-March, the rate range will still be 3.50-3.75%.
The rest of the article below the video:
The decision is in line with market expectations. The markets estimated the probability of a cut at only 3%. Economists pointed out that the substantive reasons for suspending the monetary policy easing cycle include, among others: the latest data from the US economy: solid GDP growth, a still resilient labor market and uncertainty about bringing core inflation to the Fed's target.
Sparks fly between Donald-Trump and Jerome Powell
Thus, the cycle of rapid reductions that we have observed in recent months has been stopped (at least temporarily). The decision was made in an atmosphere of unprecedented tension between the White House and the central bank and in the shadow of an investigation into, among others, Jerome Powell. The banker, whose term as Fed head ends in May (the new president will chair the FOMC meeting in June), at 8.30 p.m. he will present arguments for the pause at the conference.
See also: The value of the dollar is falling. Donald Trump assures that the currency is doing “great”
During the three previous meetings, held in December, October and September, interest rates in the world's largest economy were cut by 25 basis points each time. In total, the cost of money in the US fell by 75 basis points at that time, to the range of 3.50-3.75%. The September meeting was crucial because the Fed returned to easing its monetary policy after almost a year of pause.
Interest rates in the US. How does the Fed justify its decision?
“Available indicators suggest that economic activity is growing at a solid pace. Employment growth remains subdued and the unemployment rate is showing some signs of stabilization. Inflation remains somewhat elevated,” the FOMC said in a statement.
“The Committee aims to achieve a maximum level of employment and inflation of 2 percent in the long term. Uncertainty about the economic outlook remains high,” we read further.
Taking into account the above, the FOMC decided to maintain interest rates at 3.5-3.75%.
