To the surprise of no one, the Federal Reserve has opted to maintain interest rates at the current level.
The central bank’s policymaking Federal Open Market Committee stated it would keep the target range for the federal funds rate at 5.25% to 5.5%, a 23-year high; the rate has been kept at that level since last July. In a statement, the Committee admitted the “lack of further progress” toward its desired 2% inflation objective resulted in the rates not being cut.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run,” the Fed said. “The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”
The Committee added it would “continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.”
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