US FEDERAL RESERVE KEEPS ITS KEY CASH RATE STEADY, SAYS INFLATION IS STILL TOO HIGH

The US central bank has kept its key interest rate in the target range of 5.25 to 5.50 per cent.

The Federal Reserve made the announcement this morning, New Zealand time.

“Recent indicators suggest that economic activity has been expanding at a solid pace,” the central bank said in its Federal Open Market Committee (FOMC) statement.

“Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”

The central bank said it aimed to achieve maximum employment, and inflation at the rate of 2 per cent over the longer run.

US inflation in February, as measured by the Consumer Price Index for all urban consumers, was 3.2 per cent over the preceding 12 months, not seasonally adjusted.

“The committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the committee remains highly attentive to inflation risks.”

The FOMC said any change to the federal funds rate - America’s equivalent of the Official Cash Rate - would have to take into account labour market conditions, inflation pressures and inflation expectations.

“The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

Soon after the announcement, the Financial Times reported US stocks edged higher, as the Federal Reserve’s “dot plot” revealed it intended to cut rates by 0.75 percentage points this year.

2024-03-20T18:50:13Z dg43tfdfdgfd