ISTANBUL: The US Federal Reserve on Wednesday kept its federal funds rate unchanged in the 5.25%-5.5% target range, as widely expected, which is the highest level in 23 years.
In recent months, there has been “some further progress” toward the Federal Open Market Committee’s (FOMC) 2% inflation objective” it said in a statement, replacing “modest further progress” that was used in the previous statement on June 12.
“Job gains have moderated, and the unemployment rate has moved up but remains low,” said the Fed.
In the June statement, the Fed said: “Job gains have remained strong, and the unemployment rate has remained low.”
Inflation has eased over the past year, but remains “somewhat elevated,” it added.?
The decision to keep rates unchanged was unanimous, with all 12 committee members voting in favor of the move.
The FOMC reiterated it does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards its goal of 2
%.
It is the fifth time that the Fed has skipped a rate hike this year, after foregoing rate increases four times in 2023.
The US central bank last made a rate hike of 25 basis points on July 26 last year.
During 11 meetings from March 2022 to July 2023, the Fed raised rates by a total of 525 basis points to fight record inflation, which in the summer of 2022 rose to its highest in more than 40 years.
After soaring to 9.1% in June 2022, annual consumer inflation significantly dropped to 3% in June 2023.
The consumer price index (CPI), which measures changes in the prices of goods and services from a consumer’s perspective, rose annually at 3% in June this year, and slowed from an increase of 3.3% that was recorded in May.
CPI showed a decline of 0.1% in June, while it also managed to post a slowdown from May when it showed no change.
The Fed’s preferred annual inflation indicator, the core PCE price index, remained unchanged at 2.6% in June, according to Commerce Department figures released Friday. The
core PCE price index monthly increased 0.2% in June; but, gaining pace from a 0.1% month-on-month increase in May.
The PCE price index, which includes food and energy prices, rose 2.5% annually in June, slowing from a 2.6% annual gain in May. It increased 0.1% in June, however, after remaining unchanged in May.
Source: Anadolu Agency