FX.co ★ Fed holds interest rates steady at 23-year high

In an effort to combat inflation, the US central bank kept its benchmark interest rate unchanged in the range of 5.25% to 5.50%, although Fed officials recently indicated their intention to ease monetary policy.

The Federal Open Market Committee unanimously voted to hold policy rates steady for the seventh consecutive meeting, leaving the key rate at its highest level in 23 years.

According to Fed policymakers, inflation has eased substantially over the past year but remains elevated. Economic activity in the United States continues to expand steadily, with job growth remaining robust and unemployment low. In recent months, there has been "modest further progress" toward the 2% inflation target, the regulator noted.

Despite uncertain economic prospects, FOMC members are highly attentive to inflation risks. With this in mind, the committee decided to maintain the target range for the federal funds rate at 5.25%–5.50%.

In addition, the US central bank released updated macroeconomic projections, suggesting a potential 25-basis-point cut in 2024 and a 1% reduction in 2025. Fed officials also updated their long-term average rate, which now stands at 2.8%. The GDP growth forecast was left unchanged at 2.1% in 2024 and at 2% in 2025. Meanwhile, the regulator revised up its inflation forecast, seeing it rising to 2.4% from 2.6% in 2024 and to 2.3% from 2.2% in 2025.