Fed Keeps Interest Rate Unchanged Amid Global Uncertainty

The US Federal Reserve System (Fed) has maintained its key interest rate at 3.5-3.75 per cent per annum, according to a statement released by the Federal Open Market Committee (FOMC) following its meeting on July 29.

The decision was not unanimous, with nine of the 12 FOMC members voting to keep the rate unchanged. The presidents of the Federal Reserve Banks of Cleveland, Minneapolis, and Dallas argued in favour of raising the rate by a quarter of a percentage point.

Economic activity is expanding at a steady pace, despite heightened uncertainty caused by the conflict in the Middle East. Productivity growth and capital investment remain at high levels, while job creation keeps pace with labour force growth, and the unemployment rate remains virtually unchanged.

The FOMC noted that inflation remains elevated relative to its 2 per cent target, partly due to supply shocks leading to price increases in certain sectors, particularly energy. The Committee stated that it will ensure price stability.