The U.S. Federal Reserve has opted to maintain the federal funds rate target range at 5.25-5.5%, according to the latest report from the Federal Open Market Committee (FOMC). The committee noted that while inflation has eased over the past year, it remains somewhat elevated, with the overarching goal being to bring inflation down to the 2% target.
Fed Keeps Focus on Inflation With 5.25-5.5% Target
As anticipated, the U.S. central bank decided to leave the federal funds rate unchanged. The current target range, 5.25-5.5%, marks a 23-year high, a level reached after a sequence of 11 interest rate hikes implemented by the Federal Reserve between March 2022 and July 2023 to address high inflation.
“In support of its goals, the committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent,” the report notes. “In considering any adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the FOMC statement details.
The FOMC report added:
The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.
In response to the 2008 financial crisis and the Covid-19 pandemic, the Federal Reserve maintained interest rates near zero throughout much of the 2010s and early 2020s to encourage economic growth. The recent series of aggressive rate hikes represents a notable shift in monetary policy as the Fed aims to control inflationary pressures. While the decision to keep the federal funds rate steady was anticipated by the market, there is speculation that the Fed might pivot in September.
Market analysts are expected to closely scrutinize Fed Chair Jerome Powell’s press statements to determine whether the central bank’s stance appears dovish or hawkish. Despite differing views from some economists and critics, the FOMC remains confident that inflation can be brought back down to the 2% target. However, it has yet to succeed, with inflation still exceeding 3%, according to the Consumer Price Index (CPI). So far, after the 2 p.m. release of the FOMC report, bitcoin’s (BTC) value has remained undeterred and has been consolidating above the $66,000 range.
Source: bitcoin news