The Federal Reserve once again voted to maintain federal
interest rate between 5-1/4 percent and 5-1/2 percent during the November
meeting of the Federal Open Market Committee (FOMC). There will be one more FOMC
meeting before the end of the year.
Fed Chair Jerome Powell explained the decision to keep rates
unchanged while continuing to decrease securities and reaffirmed the
committee’s commitment to bring inflation down to a target of no more than 2
percent inflation.
“The stance of policy is restrictive—meaning that tight
policy is putting downward pressure on economic activity and inflation—and the
full effects of our tightening have yet to be felt,” Powell said during a press
conference. “Today, we decided to leave our policy interest rate unchanged and
to continue to reduce our securities holdings. Given how far we have come,
along with the uncertainties and risks we face, the committee is proceeding
carefully.”
Powell went on to note that economic growth has surpassed
expectations, with GDP rising by 4.9 percent. In spite of this, housing
activity declined due to increased mortgage rates. Labor market conditions show
improvement, but there continue to be signs of easing wage growth and fewer job
vacancies, he noted.
“The labor market remains tight, but supply and demand
conditions continue to come into better balance,” Powell said. “Over the past
three months, payroll job gains averaged 266,000 jobs per month, a strong pace
that is nevertheless below that seen earlier in the year. The unemployment rate remains low at 3.8
percent. Strong job creation has been
accompanied by an increase in the supply of workers. The labor force participation rate has moved
up since late last year, particularly for individuals aged 25 to 54 years, and
immigration has rebounded to pre-pandemic levels.”
Close monitoring of financial developments, especially in
long-term bond yields, is crucial as both could influence future policy
decisions, Powell added.