The Federal Reserve's Federal Open Market Committee (FOMC) met this week and announced its latest decision regarding interest rates on Wednesday afternoon: rates will remain unchanged at their current 22-year high of 5.5 percent.
WHAT TO KNOW ABOUT THE FED’S RATE DECISION
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The Fed says interest rates will stay at current high levels: 5.25%-5.50%
Is Jerome making the right move? pic.twitter.com/R2pt96WnMo
The continuation of the pause in rate hikes announced at the last Fed meeting comes as the FOMC reiterates that inflation "remains elevated," well above the target rate of just two percent.
Here's how the FOMC explained its latest decision:
Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated.
The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
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Even though inflation has shown an acceleration in the latest monthly reports — including the PCE Price Index, the Fed's preferred gauge — the Fed is evidently still worried about previous hikes that raised rates to their highest level in more than two decades haven't fully hit the U.S. economy.
NOW: Fed Chair Jerome Powell shares more following the FOMC's hold on interest rates at a 22-year high for a second straight meeting.
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