The US Federal Reserve has decided to keep the base interest rate at 4.25-4.5% per annum. This is the fifth consecutive meeting at which the regulator refrains from any changes in monetary policy.
The main points of the solution:
- U.S. economic growth shows signs of slowing down
- The unemployment rate remains low
- Inflation continues to exceed the 2% target%
- The regulator confirmed its commitment to fighting inflation
Disagreements within the Fed
For the first time in several decades, two members of the Fed's Board of Governors publicly opposed the decision to maintain the rate. According to analysts, this may indicate growing political pressure on the central bank.
Monetary policy prospects
The Fed chairman stressed that a decision on a possible rate cut has not yet been made. At the same time, markets continue to expect monetary policy easing in the coming months.
Financial markets' reaction
- The S&P 500 index declined
- The dollar strengthened to multi-month highs
- The ruble-dollar exchange rate showed a moderate decline
The political context
The Fed's decision was made amid continued criticism from the former US president, who has repeatedly called for lower rates. However, experts doubt the possibility of radical changes in the leadership of the central bank.
The Fed's next monetary policy meeting is scheduled for mid-autumn. Most analysts expect that by then the regulator may decide to start a cycle of rate cuts.