The US Federal Reserve decided to maintain its benchmark interest rate at a target range of 4.25 per cent to 4.50 per cent, citing solid economic growth, a strong labour market, and persistent inflation concerns. In its latest policy statement released Wednesday, the Federal Open Market Committee (FOMC) acknowledged that economic activity continues to expand, with the unemployment rate remaining low and labour market conditions holding firm. However, inflation remains somewhat elevated, and uncertainty around the economic outlook has increased. To support economic stability, the Fed reaffirmed its commitment to achieving maximum employment and a long-term inflation target of 2 per cent. "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate." It also announced a slowdown in the pace of its balance sheet reduction. Starting in April, the monthly redemption cap on Treasury securities will be reduced from $25 billion to $5 billion, while the cap on agency debt and mortgage-backed securities will remain at $35 billion. Fed officials signalled that future monetary policy decisions will be data-driven, closely monitoring economic indicators such as labour market conditions, inflation trends, and financial developments. The Committee also stated it would adjust its policy stance if necessary to mitigate risks that could hinder its economic goals. The decision to hold rates steady was backed by all voting members except Christopher J. Waller, who agreed with maintaining the current rate but preferred to continue the existing pace of securities reductions. With inflation still above target and economic conditions evolving, markets will closely watch the Fed's next moves as it balances growth, employment, and price stability. Attribution: Amwal Al Ghad English Download
