The Fed did not raise interest rates.

02/11/2023 08:00 Nhat Linh Print article

ANTD.VN - The US Federal Reserve (Fed) kept its benchmark interest rate unchanged for the second consecutive time, after raising it to a 22-year high 11 times in a row.

On November 1st (early this morning, Vietnam time), as predicted by the market, the Fed decided not to raise interest rates after its two-day policy meeting. Accordingly, the benchmark interest rate in the US is now around 5.25-5.5% - the highest in 22 years.

This also marks the second consecutive time the central bank has kept interest rates unchanged. The first was at its meeting last September.

The market expects the Fed has completed its interest rate hikes.

In a statement released after the meeting, the Fed indicated that, despite 11 consecutive interest rate hikes, the US economy is not yet in recession, and economic activity grew strongly in the third quarter. The labor market growth has slowed since the beginning of the year but remains at a high level.

US GDP grew at a rate of 4.9% in the last quarter, higher than expected. The number of jobs also reached 336,000 in September, far exceeding expert estimates.

This is one of the reasons why US government bond yields have risen recently, approaching the 5% mark. In a press conference following the meeting, Fed Chairman Jerome Powell said they would closely monitor this development, as it "could impact future interest rate decisions."

Fed Chairman Jerome Powell said they can only "fully restore price stability" if growth slows and the job market weakens. It remains unclear whether inflation can slow down while these two indicators remain unchanged. Fed officials still expect a soft landing in the US – keeping inflation under control without causing a sharp increase in unemployment.

Economists also predict that US growth will lose momentum due to pressures from rising yields, student loan repayments, dwindling pandemic savings, and other obstacles Americans face. Some experts predict a potential weakening job market as companies freeze hiring or even lay off staff amid slowing wage growth.

This year, the Fed will have one more policy meeting in December. The market currently forecasts that the Fed has completed its interest rate hike cycle and will begin cutting rates from mid-next year.

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