The Fed culminated a new FOMC meeting on Wednesday with the announcement that the market was already predicting and kept interest rates in the range of 5.25% and 5.5% in order to control inflation.
“The Committee decided to maintain the target range for the federal funds rate between 5-1/4% and 5-1/2%,” the Fed said in its statement.
The monetary authority commented that recent indicators suggest that economic activity has continued to grow at a good pace, employment growth has remained strong and the unemployment rate has remained low. However, they qualified that inflation has declined over the past year, but remains elevated.
“In recent months, no further progress has been made toward the 2% inflation target set by the FOMC,” the Fed commented, adding that the economic outlook is uncertain.
As has become customary, the FOMC statement cautions that it will carefully evaluate economic parameters when considering any adjustment to the target range for the federal funds rate.
In addition, it will continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee will slow the pace of decline in its securities holdings by reducing the monthly limit on Treasury securities redemptions from $60 billion to $25 billion.
The FOMC will maintain the monthly redemption limit on agency debt and agency mortgage-backed securities at $35 billion, and will reinvest any principal payments in excess of this limit into Treasury securities.
The market was already expecting this decision and analysts are assuming that the Fed will not lower rates until December of this year.
Por Alicia Jiménez