US Fed Rates Unchanged At 5.25-5.5%;
- The US Federal Reserve (US Fed Rates) has maintained its benchmark overnight interest rate at 5.25-5.50%.
- However, the central bank has hinted at another hike later this year to combat inflation.
- These rates are at their highest level since 2001.
- The Federal Open Market Committee (FOMC) aims for maximum employment and 2% inflation in the long term.
- They have chosen to keep the federal funds rate in the 5-1/4 to 5-1/2% range.
- The Committee will assess new information’s implications for monetary policy.
- Recent indicators show solid economic expansion with strong job gains and low unemployment, but elevated inflation.
- The US banking system is sturdy, but tighter credit conditions may impact the economy and inflation.
- The extent of these effects remains uncertain, and the Committee watches inflation risks closely.
- Rohit Arora, CEO of Biz2Credit and Biz2X, noted the Fed’s decision and the expectation of another us fed rate hike this year.
- The Fed’s guidance suggests higher interest rates for longer, with no rate cuts expected in the first half of the year.
- Anita Gandhi from Arihant Capital highlights the importance of the Fed’s outlook on future monetary policies.
- Market reactions will be driven by the Fed’s commentary more than the rate decision.
- On Wednesday, BSE Sensex and NSE Nifty dropped over 1% due to heavy selling in banking and oil stocks.
- The NSE Nifty ended below 20,000 at 19,901.40, and the rupee rebounded to 83.09 against the US dollar.
- The US Federal Reserve’s full statement emphasizes economic expansion, strong job gains, and low unemployment.
- They maintain a strong commitment to returning inflation to their 2% objective.
- The Committee will monitor incoming information to adjust monetary policy if risks to their goals emerge.
- Their assessments will consider labor market conditions, inflation pressures, financial developments, and international factors.
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