The U.S. Federal Reserve (Fed) announced Wednesday that it has kept interest rates unchanged. The Fed stated it would consider lowering the target interest rate range once it is assured of achieving and maintaining a 2% inflation rate.
“In reviewing the right stance of monetary policy, the Committee will continue to observe the implications of incoming information for the monetary outlook,” the Federal Reserve said after keeping interest rates at 5.25% and 5.5%, their most elevated level since 2001.
Unanimous decision
The determination was made unanimously through a statement, which was then explained by Fed Chairman Jerome Powel. The Fed’s future decisions remain contingent on forthcoming economic data, leaving market implications open to interpretation.
Likewise, the central bank also informed that it is prepared to adjust its monetary policy according to the context and if risks arise that may prevent it from achieving its objectives of bringing inflation back to its average level of 2%.
Furthermore, according to the Fed, recent economic indicators suggest that economic activity has expanded steadily. At the same time, employment growth has moderated but remains strong, and inflation has declined over the past year but remains high.
Gross Domestic Product is essential for the Federal Reserve
This decision is known after learning that the Gross Domestic Product GDP closed in 2023 in the United States, with a growth of 3.1%, supported by the increase in consumer spending.
The figure was higher than economists expected and above the 2.1% growth in 2022 when the U.S. economy suffered a technical recession. GDP, along with inflation, is one of the Fed’s vital data points.
The stock market was also affected by the Fed’s statement because most stocks plummeted after the announcement. For several months now, investors have been very sensitive to every Fed announcement.
Likewise, many investors feel that what happened in January will be repeated throughout the year and that 2024 will be a year without much news regarding the monetary policy of the world’s largest economy.
