NEWS
Federal Reserve Leaves Rates Unchanged As Inflation Slows
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The Federal Reserve on Wednesday announced it was holding interest rates steady after 18 months of increases as inflations slows down.
The central bank maintained the target range for the federal funds rate at 5.25% to 5.5%. In a statement announcing the decision, the Fed said although inflation remains above its target of 2%, job gains have slowed.
“Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation,” the Fed said in a statement.
The Fed aggressively raised its main rate at the past 11 consecutive meetings between March 2022 and July of this year.
The Bureau of Labor Statistics last month reported consumer prices were up 3.7% year-over-year, above the Fed’s target but down from the 2022 peak of 9.1%.
The bureau said that gasoline was the largest contributor to the increase, accounting for more than half the jump in prices. The overall energy index increased 5.6% in August, as all the major energy component indexes increased.
This week, gas prices spiked above $6 per gallon across several counties in Southern California, according to auto club AAA, driven in part by rising oil prices.
Another major contributor to the increase was the shelter index, which rose for the 40th consecutive month, the bureau said. The food index increased 0.2 percent in August, the same rate as in July.
The Federal Open Market Committee is scheduled to meet again on Oct. 31, and will be looking an consumer prices and jobs data to determine whether further rate hikes are needed to combat inflation.
“We want to see convincing evidence really that we have reached the appropriate level, and we’re seeing progress and we welcome that. But, you know, we need to see more progress before we’ll be willing to reach that conclusion,” Federal Reserve Chair Jerome Powell said at a press conference announcing the decision.
TMX contributed to this article.
