US Federal Reserve Maintains Interest Rates at Their Highest Level in 22 Years

The US central bank, the Federal Reserve, has decided to maintain its current key interest rate at 5.25%-5.5%, which is the highest it has been in 22 years. The aim of this decision is to stabilize the recent near-record level price rises and curb inflation. By raising interest rates, the central bank hopes to slow down the economy and decrease the rate at which prices increase. The US economy grew faster than expected in recent data, with a growth rate of 4.9% from July to September. This was driven by a strong job market and increased consumer spending. The Federal Reserve stated that it voted unanimously in favor of keeping rates steady and is ready to adjust its policy if necessary. Chairman Jerome Powell emphasized that a few months of positive economic data are just the start of building confidence in inflation moving towards its target. Although he acknowledged the hardships caused by high inflation, he stated that price rises still exceed the desired levels. This suggests that the central bank may postpone lowering interest rates since inflation in the US remains at 3.7%, above the Fed's target of 2%. Independent analyst Peter Jankovskis stated that the decision was not surprising and would not immediately impact the stock market. He also highlighted the role of elevated long-term bond yields in the Fed's decision, as they reflect investors' perception of the US economy's strength. Chairman Powell also mentioned that the central bank is carefully considering significant issues, including global geopolitical tensions in Ukraine and the economic implications of the Israel-Gaza situation. In various economies, higher borrowing costs have resulted in more expensive loans for businesses, homes, and other goods and services. Similarly, households in the UK have experienced budget constraints due to increased mortgage payments and borrowing expenses. The Bank of England is expected to maintain its current interest rate in its upcoming decision, following a string of 14 consecutive rate hikes.