This is the second consecutive time that the Fed has kept interest rates at the above level after starting a cycle of strong interest rate hikes from March 2022 to fight inflation.
Speaking after the two-day meeting, Fed Chairman Jerome Powell warned that the fight against inflation still has a long way to go.
The Fed said recent indicators show economic activity grew at a strong pace in the third quarter of 2023. Job growth has slowed since the beginning of the year but remains high and unemployment remains low while inflation remains high.
Fed Chairman Jerome Powell at a news conference in Washington, DC on November 1. Photo: Reuters
According to the AP news agency, Mr Powell said that the Fed is nearing the end of its interest rate increase campaign. He also said that keeping long-term interest rates high could help reduce inflation without raising interest rates further.
The FED Chairman also stressed that slowing interest rate hikes would give him more time to evaluate the economic impact and continue raising interest rates if necessary. The next meeting of the Fed will be on December 12.
Mr. Charlie Ripley, senior investment strategist at Allianz Investment Management Co. (Germany), said that although there is still a possibility for the FED to raise interest rates again, Mr. Powell’s statement shows that “the bar for interest rate hikes” has been set high. Were.
Meanwhile, Nancy Vanden Houten, chief economist at Oxford Economics Consulting Co. (UK), said the FED needs to see more evidence of slowing jobs and wage growth before it believes inflation is coming back. Target level of 2%.
In Japan, Prime Minister Kishida Fumio said on November 2 that the government would spend more than 17 trillion yen on solutions to ease the economic impact of rising inflation, including tax cuts. However, analysts are skeptical of the feasibility of the ¥5,000 billion budget to have a significant impact in boosting consumption and Japanese economic growth.