The central bank keeps interest rates at a 22-year high, pledges to monitor conditions amid stubborn inflation.
The Federal Reserve left interest rates unchanged at the November Federal Open Market Committee (FOMC) policy meeting, keeping in line with economists’ expectations.
Central bank officials voted to keep the benchmark fed funds rate at a range of 5.25 percent to 5.50 percent.
Rate-setting committee members are prepared to adjust monetary policy “as appropriate if risks emerge that could impede the attainment of the Committee’s goals.” The FOMC will take into account cumulative monetary tightening and the lags that can affect economic activity, inflation, and financial developments.
According to the FOMC, the U.S. economy expanded at a robust pace in the third quarter. While employment gains have moderated since the beginning of the year, the labor market remains strong. Inflation remains elevated and the banking system “is sound and resilient.”
“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain,” the FOMC said in a statement.
The Fed will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. Since the central bank launched its quantitative tightening campaign in March 2022, the balance sheet has fallen by about $1 trillion to below $8 trillion.
The financial markets hardly reacted to the FOMC announcement, with the leading benchmark indexes still teetering between positive and negative territory.
U.S. Treasury yields were mainly red across the board. The benchmark 10-year yield slumped by nearly eight basis points to below 4.8 percent. The two-year note shed eight basis points to slide below 5 percent, while the 30-year bond dropped by roughly five basis points to below 5 percent.
The U.S. dollar index, a gauge of the greenback against a basket of currencies, pared some of its gains midweek, tumbling to below 107.00.
Powell: No Rate Cuts for Now
After asserting a month ago that monetary policy wasn’t restrictive enough, Fed Chair Jerome Powell told reporters during the post-FOMC press conference that it is now restrictive and the economy is witnessing the effects.
By Andrew Moran
