The US Federal Reserve (Fed) on January 31 kept its benchmark interest rate unchanged at a 22-year peak, while ruling out the possibility of a rate cut in March.
On January 31, as expected by the market, the Fed decided not to raise interest rates after a two-day policy meeting. The benchmark interest rate in the US is currently around 5.25-5.5% - the highest in 22 years. In the previous three meetings, the agency also kept interest rates unchanged.
The Fed has raised interest rates 11 times since March 2022 to keep inflation in check. US inflation has slowed significantly since hitting a 40-year peak last summer. The Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index, rose just 2.6% in December 2023.
That means the Fed could cut rates this year, officials forecast last month. But the agency’s announcement on Jan. 31 dampened expectations that the first rate cut would come in March.
"The Committee does not believe it is appropriate to reduce the federal funds rate in the near term until it is more confident that inflation is moving steadily toward its 2 percent objective," the statement said.
In a press conference later, Fed Chairman Jerome Powell also emphasized that "there is currently no proposal to cut interest rates" and that lowering interest rates in March "is not the most feasible".
"We haven't really achieved a soft landing yet. I'm very happy with the progress we've made. But we can't declare victory yet," he said.
However, during the press conference, Powell expressed optimism about the economy. By the end of 2022, many analysts predict the US will fall into recession due to the Fed's aggressive fight against inflation, which has left millions of people unemployed.
"In fact, the US has been growing solidly. The unemployment rate is 3.7%, which shows that the labor market is still strong. We have had six months of good inflation data. I expect that to continue," he said. Powell affirmed that the US is "a good economy".
US stocks fell after the Fed said it would not discuss cutting interest rates in March. At the close of trading on January 31, the DJIA index fell 0.8%. The S&P 500 lost 1.6% and the Nasdaq Composite fell 2.2%.
Ha Thu (according to CNN, Reuters)
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