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Wednesday, October 30, 2024

US interest rates. Fed decision from July 31, 2024

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The Fed left interest rates unchanged at 5.25-5.50 percent in the US, it said in a statement after the meeting. The Fed assessed that risks to achieving employment and inflation goals have continued to decline over the past year.

The decision about interest rates was in line with market expectations and was adopted unanimously. In the current tightening cycle, the Fed has raised interest rates by a total of 525 basis points. Interest rates in USA are at their highest since 2007, and the pace of their increase is the highest since the early 1980s, when Paul Volcker was Fed Chairman.

“To achieve its goals, the Committee has decided to maintain its 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 incoming data, the changing outlook, and the balance of risks. The Committee does not expect it would be appropriate to reduce the target range until it becomes more certain that inflation is moving toward a sustained 2 percent trend. In addition, the Committee will continue to reduce holdings of Treasury securities and agency debt and agency mortgage-backed securities,” the statement said after the meeting.

“In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the impact of incoming information on the economic outlook. The Committee is prepared to adjust the monetary policy stance as appropriate if threats to the achievement of the Committee's objectives emerge. In its assessments, the Committee will take into account a broad range of information, including readings on the labour market, inflationary pressures and expectations, as well as financial and international developments,” it added.

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Uncertain outlook

The Fed indicated that the economic outlook remained uncertain.

“The Committee assesses that risks to the achievement of the employment and inflation targets have continued to decline over the past year. The economic outlook remains uncertain, and the Committee draws attention to risks to both sides of its dual mandate,” it said in a statement after the meeting.

“The latest data indicate that economic activity continues to expand at a solid pace. Job creation has moderated and the unemployment rate has risen but remains low. Inflation has declined over the past year but remains relatively elevated. There has been some further progress toward the Committee's 2 percent inflation target in recent months,” it added.

Main image source: Shutterstock



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