Fed holds interest rates, markets dip into the red
Crypto and equities dipped lower Wednesday after the central bank said interest rates wouldn’t be budging
The Federal Reserve opted to keep interest rates at their current level Wednesday, marking the first pause in 15 months.
Ongoing improvements in the labor market and low unemployment, coupled with elevated inflation, led to the committee’s decision, the central bank wrote in Wednesday’s statement.
The move is the first time the Fed has paused increases since starting to raise rates in March 2022. The stretch lasted ten consecutive rate increase rounds, a strategy the Fed hoped will curb the highest inflation the country has seen in more than four decades, but markets have fretted over whether a soft landing is achievable.
“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” central bankers wrote in Wednesday’s statement. “In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
Committee members also noted that recent headwinds in the US banking system have contributed to a decline in economic conditions, although the Fed is confident that the crisis is over.
“The U.S. banking system is sound and resilient,” the statement read. “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”
The S&P 500 and Nasdaq Composite indexes dipped on the news, each posting losses of about 0.5%.
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