The US Federal Reserve has decided to leave its main interest rate where it is. As per ANI, the rate stays at 3.75-4 per cent. The decision was announced on Wednesday, October 28, in Washington DC. Officials looked at two things: prices are still rising fast, but people are still spending and the economy is strong.
Fed holds rates, but two members wanted a hike
According to ANI, the Federal Open Market Committee (FOMC) voted 10-2 to keep the rate unchanged. Two members wanted to raise it by 25 basis points. This shows that the members did not fully agree on how to deal with rising prices.
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Deep Dive
What interest rate did the Federal Reserve keep unchanged?
Why did the Fed hold rates despite rising inflation?
Could the Fed raise interest rates at its next meeting?
“The Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, in support of the Federal Reserve’s dual mandate,” the FOMC said in its statement.
The Fed had raised rates by 25 basis points in September. That took the range to 3.75-4 per cent. According ANI, it was the first increase since 2023. With this latest decision, borrowing costs stay at the same level. The central bank is now checking whether prices are moving towards its 2 per cent target.
Why the Fed is waiting
According to the FOMC statement, the economy is growing at a strong pace. People are still spending, even with uncertainty linked partly to world events. The Fed also pointed to strong productivity growth and heavy investment by businesses.
{{/usCountry}}According to the FOMC statement, the economy is growing at a strong pace. People are still spending, even with uncertainty linked partly to world events. The Fed also pointed to strong productivity growth and heavy investment by businesses.
{{/usCountry}}“Job gains have kept pace with the workforce, and the unemployment rate has changed little,” the statement said.
But prices remain a big worry. According to ANI, the Fed said it needs more information before it decides what to do next so that inflation returns to its target.
“Inflation remains elevated,” the FOMC said. It added that more information would help it decide the policy stance needed for a timely return to its 2 per cent inflation goal.
The Fed also left some other rates unchanged. The rate paid on reserve balances stays at 3.90 per cent from October 29. The overnight repurchase agreement rate remains at 4 per cent. The overnight reverse repurchase agreement offering rate stays at 3.75 per cent, with a daily limit of USD 160 billion per counterparty. The primary credit rate, which is the rate banks pay when they borrow directly from the Fed, also stays at 4 per cent, as per ANI.