The Federal Reserve this afternoon announced that it will not be raising interest rates as the year draws to a close. The Fed’s Open Market Committee wrapped up a two-day meeting by issuing a statement that indicated a pause in interest rate increases is called for with inflation seeming to be fairly well controlled, although still above the Fed’s target of 2%.
Fed Chairman Jerome Powell told a news conference after the announcement that he and his colleagues are pleased with the progress that has been made in bringing down inflation but more needs to be done. He did not indicate that the Fed would continue raising rates next year, but also did not commit to rate cuts. Economic observers have suggested that the Fed might institute three rate cuts of 0.25% each next year.
“People have individual assessments of when it would be appropriate to begin to start to dial back on the tight policy we have in place and that’s a discussion we’ll be having going forward,” Powell said.
In its announcement of the interest rate pause, the Fed said, in part: “Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”
The Fed’s Open Market Committee said that it decided to maintain the target range for the federal funds rate at 5-1/4% to 5-1/2%. The committee said it will continue to assess additional information and its implications for monetary policy in determining the extent of any additional policy firming that may be appropriate to return inflation to 2%.
The Open Market Committee said that its assessments of economic conditions when deciding how to proceed with interest rates will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
