Fed leaves interest rates unchanged as inflation remains behind target

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Fed leaves interest rates unchanged as inflation remains behind target

On Wednesday, the 1st of May 2019, as expected, the Federal Reserve had held the interest rates unchanged, as Fed policymakers had bucked up the US job surge alongside a much stronger-than-anticipated economic growth, hoping that the weak inflation data of 1.5 percent that fell well below US Central Bank’s target of 2.0 percent would edge higher.

A decision to keep the interest rate unchanged came after a day the US President Donald Trump had again called the Fed to slash interest rate by a full percentage to reinvigorate the US economy to reach a record growth. However, following Wednesday’s (May 1st) FOMC minutes, Fed policymakers had been quoted saying that the US economy had now been in a good shape with an ongoing surge in job creation alongside a robust economic growth, which would likely to contribute a rise in inflation.

Followed by a two-day meeting, on May 1st, GMT. 18.00, Fed had announced that the interest rate would be unchanged to 2.5 percent for upper bound and to 2.25 percent for lower bound. Nevertheless, Fed had started to inject slight technical stimulus, as it had slashed the interest on excess reserves to 2.35 percent from previous 2.40 percent.

One of the chief concerns addressed during the policy statement had been US economy’s muted level of inflation, currently growing at an annualized rate of 1.5 percent, which might weigh on US economy over the next quarter, if businesses were besieged with doubts that the country’s underlying strength had not been as concrete as it seemed, and became less willing to spend amid multiple indications of contraction.