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US Federal Reserve keeps key rates unchanged in a unanimous decision Monetary Policy
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US Federal Reserve keeps key rates unchanged in a unanimous decision

India Blooms New Service | @indiablooms | 02 Nov 2023, 01:29 am

Washington DC: The Federal Reserve, which is the Central bank of the United States, on Wednesday, opted to keep interest rates steady at their highest level in 22 years for the second consecutive meeting, Bloomberg reported.

It also indicated that the recent surge in Treasury yields could have a dampening effect on both the economy and inflation.

“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation,” the US central bank’s policy-setting Federal Open Market Committee said in a post-meeting statement published Wednesday in Washington, adding the word “financial” to language that previously referred only to credit conditions, said the Bloomberg report.

“The extent of these effects remains uncertain,” the Fed said, repeating that it “remains highly attentive to inflation risks.”

This decision maintains the target range for the key federal funds rate at 5.25% to 5.5%, the highest since 2001.

This is part of a broader strategy to slow down the rate hikes as the central bank approaches the conclusion of its tightening efforts.

There were only minor alterations made to the statement. One adjustment was an upgrade in their description of economic growth, changing it from "solid" to "strong" to better align with improved economic data that has emerged since their September meeting. The decision was reached unanimously by officials.

Policymakers reiterated that, in determining “the extent of additional policy firming that may be appropriate to return inflation to 2% over time,” they would consider the cumulative tightening of monetary policy, as well as lag effects on the economy and inflation.

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