Fed leaves US interest rates unchanged

The US Federal Reserve has decided not to raise interest rates further. The US umbrella organization of central banks has made borrowing more expensive in eleven steps over the past year and a half to slow the rapid rise in prices. Now the Fed has held off on raising interest rates for the second time this year.

Best level

Now interest rates in the US are at their highest levels since 2001. By making borrowing more expensive, the Fed is slowing demand in the economy, which will ensure that prices do not rise as quickly. The risk is that the US economy could end up in recession because of the drop in demand.

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But the Fed’s new forecasts show that its 19 policymakers are actually more optimistic about the economic outlook. They are counting on stronger economic growth in the coming years than in the past. At the same time, they expect unemployment to be lower than they previously thought.

Not a big surprise

That also gives the Fed more room to bring down inflation, which remains well above its desired 2%. New forecasts released by the global body for central bankers also show that the vast majority of Fed policymakers favor another rate hike this year. They also expect to cut rates less quickly next year than previously expected.

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The pause in the rate hikes did not come as a big surprise. In financial markets, attention is mainly focused on the explanation that Fed Chairman Jerome Powell will give later in the evening regarding the interest rate decision. It may provide hints about future interest rate policy in the United States.