US central bank call comes as inflation persists at an elevated rate
The US Federal Reserve elected to hold interest rates steady today at the end of its Federal Open Markets Committee (FOMC) meeting.
The decision follows a 25 basis point hike after the FOMC's September meeting and leaves the Fed's overnight rate in a range between 3.75 and 4 per cent. Following that decisions Fed Chair Kevin Warsh emphasized the central bank's committment to price controls and bringing inflation down towards its two per cent target. US CPI in September was reported at an annualized rate of 3.7 per cent.
"Inflation remains elevated. The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal. The Committee will deliver price stability," a statement accompanying the decision reads.
Between the September and October FOMC meetings, US Treasury yields saw some degree of volatility, with the 10-year treasury yield hitting its highest point in over two decades before stabilizing just around five per cent. Despite the hold today, markets have begun to price in the likelihood of another interest rate hike before the end of the year.
"Economic activity is expanding at a strong pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little," the statement reads.
The decision was not unanimous. Governors Cook and Hammack voted for another 25 basis point interest rate hike.
