The United States Federal Reserve has decided to keep its key interest rate steady at 5.25%-5.50% for the sixth consecutive time, the institution said on Wednesday in its latest Federal Open Market Committee (FOMC) statement. According to the release, "economic activity has continued to expand at a solid pace."
Despite sustained economic growth and strong employment gains, the Fed noted a disturbing stall in progress toward its 2% inflation target, indicating potential future challenges in monetary normalization. However, the committee added that "the risks to achieving its employment and inflation goals have moved toward better balance over the past year." This is a change from the previous remark that suggested these figures were moving towards a "better balance."
Today's statement introduced a key modification in the Fed's approach to its bond holdings. Starting in June 2024, the Federal Reserve will slow the pace of its bond reduction by lowering the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
