The US Federal Reserve is leaving its key interest rate unchanged at a high level. The monetary authorities reiterated their decisive stance in the fight against inflation.
The US Federal Reserve (Fed) has once again not touched its key interest rate. It decided to maintain the range of 5.25 to 5.50 percent.
The central bank paused for the fourth time in a row after raising the key interest rate to the highest level in more than two decades in the fight against inflation.
Fed reiterates wait-and-see stance
The central bank is likely to turn things around this year and loosen monetary policy. As early as December, the monetary authorities around Fed Chairman Jerome Powell had planned several interest rate cuts for 2024.
But now they have made it clear that they are not ready for that yet. One must first gain more confidence that inflation is moving sustainably towards two percent, the central bank said in its statement. In December, inflation in the USA was 3.4 percent, after rising to a good nine percent in 2022. However, unlike before, the monetary authorities no longer spoke about the possibility of raising interest rates.
Fed Chairman Powell also stated at the subsequent press conference that the central bank was prepared to keep the key interest rate high for longer if necessary. However, it might be appropriate to lower this “sometime this year”. But we are waiting for further data.
First interest rate cut in March at the earliest
Observers do not expect a first downward move in interest rates until after the next meeting in March at the earliest. So far, the central bank appears to have succeeded in slowing the price rise without completely slowing down the economy. The recently robust US economy gives it more scope to maintain its tight monetary policy for longer.
Claudia Sarre, ARD Washington, tagesschau, January 31, 2024 9:09 p.m