The US Federal Reserve, or more formally known as the Federal Reserve System, announced their decision to keep the interest rates unchanged at a meeting Wednesday. This announcement comes as the inflation rate has cooled for the past three months.
The decision to not raise the interest rates is a sign that the Fed is continuing to monitor the economy closely, with the goal of creating more long-term stability. The new announcement follows its previous decision in April, in which the Fed decreased the interest rate for the first time since 2008.
The current state of the economy has spurred an intense debate from economists, with many arguing that the current rates are too low and others believing that the rates should remain steady. The Fed’s decision to keep the rates unchanged is a sign that they are confident in the current state of the economy.
The Fed’s decision also comes after recent publications that show that inflation rates have been cooling. The Bureau of Labor Statistics reported that the Consumer Price Index, or the index of prices for most goods and services, was up just 1.8 % in April of this year. This moderate increase is due to the decrease in gas prices and weak housing market activity.
The steady interest rate is also beneficial to households. Low interest rates mean that people have more money to spend and can accumulate more debt with the same amount of money. It also benefits people who have borrowed money. Lower interest rates mean that it becomes more affordable to pay back the money that has been borrowed.
Ultimately, the federal reserve decision to keep the interest rates unchanged is a sign of confidence in the US economy, which could create more long-term stability in the coming months. In particular, the moderate rate of inflation could keep prices of goods and services stable in the near future. This decision could also benefit both consumers and businesses with lower levels of debt and more money to spend.