US Federal Reserve Holds Key Rate Steady Amid Stubborn Inflation

The US Federal Reserve hesitated to further increase interest rates, indicating a shift in monetary policy. Chairman Jerome Powell emphasized the unlikelihood of a rate hike in the near future, focusing on maintaining the current policy stance to address inflation concerns. The decision comes after the Fed left the key interest rate steady for the sixth consecutive time, aiming to align inflation with the 2 percent target. Powell highlighted the need for convincing evidence to support any rate hikes, expressing reservations about the current inflationary trends. Despite the recent rise in consumer price inflation, the Fed remains cautious about prematurely adjusting policy restraint. Economists speculate about the potential impact on economic activity and employment if policy adjustments are made too soon or too late. Moody’s recent assessment suggests that an interest rate cut is improbable due to persistent inflationary pressures in the US economy. The Fed’s commitment to achieving maximum employment and steady inflation underscores its cautious approach to future rate changes, as uncertainty looms over the trajectory of inflation.