The Federal Reserve has opted to maintain its benchmark interest rate within the range of 4.25% to 4.5%, according to an announcement released Wednesday. This decision extends the pause in interest rate hikes that began in January.
The move was widely anticipated by market analysts. While acknowledging fluctuations in net exports have impacted recent data, the central bank indicated that indicators generally suggest the economy continues to expand at a robust pace.
The Federal Reserve highlighted the continued low unemployment rate and strong conditions in the labor market. Inflation, however, remains elevated. The central bank stated it is closely monitoring potential risks to both sides of its dual mandate – achieving maximum employment and maintaining a 2% inflation rate.
The statement reiterated the Federal Reserve’s willingness to adjust monetary policy if risks emerge that could impede the attainment of the committee’s objectives. This flexibility will be informed by a broad range of data, including metrics on labor market conditions, inflationary pressures and inflation expectations.
Higher interest rates typically help to curb inflation but can negatively affect stock markets. Conversely, lower interest rates have the potential to exacerbate inflationary pressures.
