Fed does not raise interest rates

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

ANTD.VN - The US Federal Reserve (Fed) kept its reference interest rate unchanged for the second consecutive time, after 11 consecutive interest rate hikes to a 22-year peak.

On November 1 (early this morning Vietnam time), as predicted by the market, the Fed decided not to raise interest rates after a 2-day policy meeting. Accordingly, the reference interest rate in the US is currently around 5.25-5.5% - the highest in 22 years.

This is also the second consecutive time the agency has kept interest rates unchanged. The first time was at the meeting last September.

Thị trường kỳ vọng Fed đã hoàn thành các đợt tăng lãi suất ảnh 1

Markets expect the Fed to finish raising interest rates

In a statement issued after the meeting, the Fed pointed out that despite 11 consecutive interest rate hikes, the US economy has not yet entered a recession, and economic activity grew strongly in the third quarter. The growth momentum of the labor market has cooled since the beginning of the year but remains high.

US GDP grew at a faster-than-expected 4.9% pace last quarter. The number of jobs also reached 336,000 in September, far exceeding experts' estimates.

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

Fed Chairman Jerome Powell said they can only “restore full price stability” if growth slows and the job market weakens. It’s unclear whether inflation can slow until those two numbers cool. Fed officials still expect a soft landing — one that tames inflation without causing a sharp rise in unemployment.

Economists also expect U.S. growth to lose steam due to pressure from rising yields, student debt repayments, dwindling pandemic savings and other hurdles Americans face. Some experts predict the job market could weaken, as companies freeze hiring or even cut staff amid slowing wage growth.

This year, the Fed will have one more policy meeting in December. The market currently predicts that the Fed has completed the process of raising interest rates and will start reducing them from the middle of next year.

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