To aid in the country’s economic expansion, the Federal Reserve announced they are holding interest rates between 1.5% and 1.75% at the December meeting. There will be no more rate cuts but this is a positive, shifting the fears that there will be a recession.
With the nation’s economic expansion in its 11th year, the Fed will watch closely to the U.S. economy. Of the seventeen participants on the Federal Open Market Committee’s policy-setting body, thirteen agreed with keeping the rates steady going into the new year. Only four on the committee feels that rates should be increased.
Federal Reserve Chairman Jerome Powell is also in agreement with keeping interest rates level. According to Powell, “the Fed can hold rates steady, because historically unemployment has been able to remain at very low levels for an extended period of time without having an effect on inflation.”
The Commerce Department announced in the meeting that consumer prices are up by 2.1% over 2019 but overall inflation has remained below the Fed’s 2% target range. Powell comments that the monetary policy is in a “good place”. The Fed’s predict the US economy will grow at 2.2% and slow to 2% the next year.
Although the global economic growth is sluggish and there is uncertainty with global trade, the US economy is a “star performer” says Powell. This is thanks to the nation’s strong consumer spending and steady job growth.
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