US Borrowing Costs Hit Two-Decade High After Fed Holds Interest Rates

The US government's long-term borrowing costs rose to their highest level since 2007, following the Federal Reserve's decision to maintain interest rates at a fifth consecutive meeting. The yield on the 30-year US Treasury bond increased by as much as 14 basis points to 5.23%, its highest level in nearly two decades.

The Fed's benchmark interest rate remains at 3.5% to 3.75%, and despite this, financial markets interpreted the decision as increasingly hawkish. Several economists argued that the central bank failed to adequately explain why it chose not to raise rates despite persistent inflation risks.

US inflation stood at 4.1% in May, more than double the Federal Reserve's long-term target of 2%. Analysts say the central bank must now weigh the risks of tightening monetary policy further against the danger of allowing inflation expectations to become entrenched.