US growth is surprising, Fed decides to keep interest rates stable, "signaling" about the future

On November 1, at the end of a two-day policy meeting, the US Federal Reserve (Fed) decided to keep interest rates stable at the highest level in the past 22 years (5.25%-5.50%).

Fed tăng lãi suất lần thứ 10 liên tiếp, từ bỏ một lập luận về 'chính sách cứng rắn', 'bắn tin' có thể dừng việc này. (Nguồn: NAsdaq)

The Fed continues to maintain interest rates at their highest level in 22 years. (Source: NAsdaq)

The Fed noted signs of surprising growth in the US economy in the third quarter of 2023 but also recognized the tight financial conditions facing businesses and households.

According to the Fed, “economic activity expanded at a strong pace in the third quarter” was the basis for Fed policymakers to agree to keep the benchmark interest rate at 5.25%-5.50%, maintained from July 2023.

Recent data shows that the US Gross Domestic Product (GDP) grew 4.9% in the third quarter of 2023.

The Fed's latest statement also noted that: "With job growth remaining strong and inflation rising, the Fed continues to consider the extent to which additional policy accommodation may be appropriate to return inflation to its 2 percent objective."

The decision to hold rates steady this time shows that the Fed is still monitoring the growing impact of past rate hikes as it considers its next move, recognizing the "lag with which monetary policy affects economic activity and inflation as well as economic and financial developments."

Savings during the Covid-19 pandemic, combined with low unemployment and continued wage growth, have allowed consumers to continue spending, helping to support economic growth. That has helped ease concerns about student loan deferrals and weakening consumer confidence that would otherwise have worried people.

Additionally, companies like McDonald's and Amazon have posted strong earnings while home prices continue to rise despite high mortgage rates.

Consumer spending continued to rise despite falling consumer confidence amid concerns including recent unrest in the Middle East, according to the Conference Board.

Source