Washington DC [US], October 28 (ANI): The US Federal Reserve kept its benchmark interest rate unchanged at 3.75-4 per cent on Wednesday, as policymakers weighed persistently elevated inflation against resilient domestic spending and strong economic activity.
The Federal Open Market Committee (FOMC) voted 10-2 to maintain the target range for the federal funds rate, while two members favoured a 25-basis-point increase, indicating differences over the appropriate policy response to inflation.
“The Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, in support of the Federal Reserve’s dual mandate,” the FOMC said in its statement.
The decision comes after the Fed raised rates by 25 basis points in September, taking the range to 3.75-4 per cent in its first increase since 2023. The latest decision leaves borrowing costs at that level as the central bank assesses whether inflation is moving towards its 2 per cent target.
The Fed said economic activity was expanding at a strong pace, with domestic spending remaining resilient despite uncertainty linked partly to geopolitical developments. It also pointed to strong productivity growth and robust capital investment.
“Job gains have kept pace with the workforce, and the unemployment rate has changed little,” the statement said.
However, inflation remains a key concern for policymakers. The central bank said it needed more information before determining the appropriate policy stance to ensure inflation returns to its target.
“Inflation remains elevated,” the FOMC said, adding that the accumulation of more information would help it determine the policy stance needed to ensure a timely return to its 2 per cent inflation goal.
The Fed also maintained the interest rate paid on reserve balances at 3.90 per cent, effective October 29. The overnight repurchase agreement rate remains at 4 per cent, while the overnight reverse repurchase agreement offering rate stays at 3.75 per cent, with a daily limit of USD 160 billion per counterparty.
The primary credit rate, charged to eligible banks borrowing directly from the Fed, was also maintained at 4 per cent. (ANI)
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