China News Service, New York, November 11 (Reporter Wang Fan) The U.S. Federal Reserve announced on November 1 that it would keep the target range of the federal funds rate unchanged at 11.1% to 5.25%, in line with market expectations.
The Federal Reserve issued a statement after its two-day monetary policy meeting saying that recent indicators point to strong economic growth in the United States in the third quarter. Since earlier this year, job growth has slowed but remains strong, unemployment remains low, and inflation remains high. The U.S. banking system is sound and resilient. The extent of the impact remains uncertain as tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, employment and inflation.
The Fed remains highly concerned about inflation risks, the statement said. To achieve its full employment and inflation targets, the Fed decided to keep the target range for the federal funds rate unchanged at 5.25% to 5.5%. The Committee will continue to assess more information and its implications for monetary policy. In determining the appropriate level of additional policy tightening, the Fed will consider the cumulative tightening of monetary policy, the impact of monetary policy on economic activity, the lag of inflation, and the state of economic and financial developments. In addition, the Fed will continue to reduce the size of its balance sheet as planned.
Fed Chairman Jerome Powell said at a press conference after the regular monetary policy meeting that "we are approaching a phase of risk balance" and that "we will proceed with caution." He said the recent climb in Treasury yields has pushed up borrowing costs, which could ease price pressures and affect the Fed's monetary policy. At the same time, he stressed that "there is no interest rate cut at all" and that there is still a long way to go to bring inflation down to the set target of 2%.
After Powell's speech, the three major U.S. stock indexes closed slightly higher, and U.S. Treasury yields retreated slightly. The Wall Street Journal reported that investors are trying to look for hints from the Federal Reserve's move to keep the federal funds rate unchanged for two consecutive times, and that a stop to rate hikes is exactly what they want. In addition, a decline in long-term US Treasury yields also helped to push equities higher.
CNBC, citing analysts, said that the Federal Reserve has changed the wording of "tightening credit conditions" to "tightening financial and credit conditions" in its statement after surging Treasury yields caused concern on Wall Street. It is clear that the bar for rate hikes has become higher. But at the same time, with inflation still high and economic growth strong, the Fed may take a tight monetary stance for a long time. (ENDS)