PT Solid Gold Berjangka | Fed Holds Rates Steady And Notes Progress on Inflation
Federal Reserve FOMC FOMC Meeting Minutes PT SGB Solid Group SG Berjangka Solid Gold Berjangka
Solid Gold Berjangka | Federal Reserve officials left short-term interest rates unchanged on Wednesday, but indicated that inflation is approaching their target.
The central bank governors gave no obvious signs that a rate cut was imminent, choosing to maintain their language indicating that progress was being made but that concerns about economic conditions persisted. It also maintained its declaration that further progress is needed before a rate cut can be achieved.
In its post-meeting statement, the Federal Open Market Committee (FOMC) said, “The Committee finds that risks to the achievement of its employment and inflation goals continue to shift toward a more favorable balance.”
Inflation has moderated over the past year but remains somewhat elevated. In recent months, there has been some progress toward the Committee’s 2 percent inflation target.”
This statement represents an upgrade from the June meeting, which two years ago showed only “modest” progress in reducing price pressures, which were at their highest level since the early 1980s. In addition, the previous statement simply described inflation as “rising” rather than “rising slightly.”
The FOMC unanimously left the benchmark next-day interest rate unchanged at 5.25%-5.5%. This rate is the highest it has been in 23 years and has been maintained for the past year as a result of 11 hikes aimed at curbing inflation.
The word “highly” was removed from the June statement, and the commissioners said they are “mindful” of the risks of both full employment and low inflation.
Markets had been looking for signs that the Fed would cut rates at its next meeting in September, and futures prices had anticipated further rate cuts at its November and December meetings.
But the statement left intact a key sentence about the Fed’s intentions: “The Fed does not believe it is appropriate to lower its target range until it has more confidence that inflation is moving toward 2% on a sustained basis.
This language underscores the Fed’s reliance on data; Fed officials insist that the direction of interest rates is not set in stone and is not guided by forecasts.
Recent economic data indicate that price pressures have fallen considerably from their peak in mid-2022, when inflation hit its highest level since the early 1980s.
The Fed’s preferred measure of inflation is around 2.5% per annum, but other measures are slightly higher; the Fed has a target of 2% inflation and has insisted on adhering to this target despite pressure from some to tolerate inflation above that level.
The Fed is maintaining its tightest monetary policy in decades, yet the economy continues to expand.
Gross domestic product (GDP) grew at an annualized rate of 2.8% in the second quarter, well above expectations, boosted by personal and government spending and inventory buildup.
The unemployment rate of 4.1% is far from what economists consider full employment; the Fed statement noted that “the unemployment rate rose but remains low.” Payroll processor ADP reported Wednesday that private sector employment rose by only 122,000 in July, indicating that the labor market may be weakening.
However, the ADP report also included positive inflation data, indicating that wages are rising at their slowest pace in three years. Also on Wednesday, the Labor Department reported that wages, benefits, and salaries rose only 0.9% in the second quarter, below expectations and 1.2% in the first quarter. Fed officials have declared that they will pursue policy cautiously despite signs that inflation is weakening and concerns that the economy may not be able to withstand the highest borrowing costs in the past 23 years for long. In another economic indicator released Wednesday, pending home sales rose 4.8% in June, a significant increase that defied expectations for a 1% increase.
Source: cnbc.