The U.S. Federal Reserve (Fed) announced that it will keep its benchmark interest rate unchanged at its highest level in 22 years, in line with market expectations.
Following a two-day policy meeting on September 20, the Fed announced that it would not raise interest rates. In recent weeks, the institution signaled its intention to wait for more data to assess the impact of previous rate hikes on the U.S. economy.
Since March 2022, the Fed has raised interest rates 11 times, aiming to cool down inflation that is currently double its target. The current benchmark interest rate in the U.S. stands at around 5.25-5.5% - the highest since 2001.
The Fed also released a series of forecasts yesterday, indicating its intention to raise the interest rate to 5.63-5.87% this year. This suggests that the Fed might consider another rate hike by the end of the year. The growth forecast for the U.S. economy this year has also been significantly revised upward to 2.1%. Meanwhile, the unemployment rate is expected to decrease slightly.
However, Fed officials also believe that next year, the number of rate cuts will be fewer than previously forecasted. This has raised concerns among investors that interest rates will remain high for a more extended period.
Fed officials emphasized their “commitment to bringing inflation back to the 2% target.” Their next meeting is scheduled for the end of the following month.
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