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Interest rates in the US. Fed decision of June 12, 2024

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The Fed left interest rates in the US unchanged at 5.25-5.50 percent – said in a statement after the meeting. The US central bank reiterated that additional tightening of monetary policy will depend on macro data.

Decision about interest rates was in line with market expectations and was adopted unanimously. In the current cycle of tightening monetary policy, the Fed has raised interest rates. by a total of 525 bps. Interest rates In USA are the highest since 2007, and the pace of their increase is the highest since the early 1980s, when Paul Volcker was the Fed president.

“To achieve its objectives, the Committee has decided to maintain the target range for the federal funds rate at 5.25 percent to 5.5 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully evaluate emerging data, the changing outlook and the balance of risks “The Committee does not expect it will be appropriate to reduce the target range until it has greater confidence that inflation will continue to trend toward 2 percent. In addition, the Committee will continue to reduce its portfolio of Treasury securities and agency debt and agency mortgage-backed securities.” – was written in a statement after the meeting.

“In assessing the appropriate monetary policy stance, the Committee will continue to monitor the impact of incoming information on the economic outlook. The Committee is prepared to appropriately adjust the monetary policy stance in the event of threats that may hinder the achievement of the Committee's objectives. In its assessments, the Committee will take into account a wide range of information , including readings on the situation on the labor market, inflation pressure and inflation expectations, as well as the development of the financial and international situation,” it added.

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The economic outlook remains uncertain

“The Committee assesses that the risks to achieving the employment and inflation targets have decreased over the past year. The economic outlook is uncertain, and therefore the Committee continues to pay particular attention to inflation risks,” it said in a statement after the meeting.

“The latest data shows that economic activity continues to grow at a solid pace. Job growth remains strong and the unemployment rate remains low. Inflation has declined over the past year but remains elevated. In recent months There has been little further progress towards the Committee's 2% inflation target. – added.

The Fed released new quarterly macroeconomic projections and a dot-plot showing the forecast of the path of interest rates according to Reserve members.

In June, the FOMC forecasts interest rates. at the level of 5.1 percent at the end of 2024, 4.1 percent at the end of 2025 and 3.1 percent at the end of 2026. In March, the Fed forecast that interest rates in the USA they will be at 4.6%. at the end of 2024, 3.9 percent at the end of 2025 and 3.1 percent at the end of 2026

The median forecast regarding expectations regarding long-term interest rates, i.e. the so-called neutral interest rate, amounted to 2.8 percent in June. compared to 2.6 percent in March.

Main photo source: mervas/Shutterstock

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