US Federal Reserve Keeps Interest Rates Steady at 5.25% to 5.5%
The US Federal Reserve has decided to keep the federal funds rate unchanged at 5.25% to 5.5% for the eighth time. The Fed observed that job gains in the US economy have moderated, while the unemployment rate has slightly increased but remains low.
In support of its goals, the committee decided to maintain the target range for the federal funds rate. Recent data indicates that economic activity in the US has continued to expand at a solid pace. The committee reaffirmed its commitment to achieving maximum employment and a long-term inflation rate of 2%.
The economic outlook remains uncertain, and the committee is vigilant about the risks to both sides of its dual mandate. The Fed emphasized that it will carefully assess incoming data, evolving economic conditions, and the balance of risks. The committee does not expect it will be appropriate to reduce the target range until it has greater confidence that inflation is moving sustainably toward 2%.
Additionally, the Fed will continue to reduce its holdings of treasury securities, agency debt, and agency mortgage-backed securities. The committee will keep monitoring a wide range of information, including labor market conditions, inflation pressures and expectations, and financial and international developments, to determine the appropriate stance of monetary policy.
Doubts Revealed
US Federal Reserve -: The US Federal Reserve, often called the Fed, is like the big bank for the United States. It helps control the money and keeps the economy stable.
Interest Rates -: Interest rates are like the extra money you have to pay when you borrow money from a bank. If the rate is high, you pay more extra money.
5.25% to 5.5% -: This is the range of the interest rate. It means if you borrow money, you have to pay back 5.25% to 5.5% more than what you borrowed.
Federal Funds Rate -: This is the interest rate at which banks lend money to each other. It helps control how much money is in the economy.
Job Gains -: Job gains mean more people are getting jobs. It’s a sign that the economy is doing well.
Unemployment Rate -: The unemployment rate is the percentage of people who want a job but can’t find one. A low rate means most people have jobs.
Maximum Employment -: Maximum employment means almost everyone who wants a job has one. It’s a goal to make sure people can work and earn money.
Inflation Rate -: The inflation rate is how much prices for things like food and clothes go up over time. A 2% rate means prices are going up a little bit each year.
Treasury Securities -: Treasury securities are like IOUs from the government. People buy them to lend money to the government, and the government pays them back later with extra money.