US FED Policy Meeting:
The September policy meeting of the Federal Reserve, America’s central bank, has ended. After a meeting of 2 days, a decision has been taken to keep the interest rates stable. But there are indications of further increase in rates. Due to this, all-round selling is being recorded in the global market. Fed Chairman said that FED’s focus is on controlling inflation and economic stability.
US Fed kept interest rates stable
The Federal Reserve has kept the interest rates stable, which is 5.5%. All the members of the Fed voted in favor of not increasing interest rates this time. However, there are indications of further rate increases. That means the Fed made ‘Hawkish Pause’ in this policy. It has been said in the minutes issued that the decision on further interest rates will depend on the economic situation. At present the focus is on controlling inflation, which has to be brought below 2%. This means that there are signs that interest rates will remain at high levels for a long time. Also, on the economic front, US growth forecast in 2023 has been increased to 2.1%.
Fed Chairman’s statement
US FED Chairman Jerome Powell said that our focus is on controlling inflation and economic stability. At present, it will take more time to bring inflation down to 2%. Therefore there is a need for ‘Restrictive’ policy. However, America’s economic condition is strong. The labor market is also showing signs of change. Also, consumption remains strong.
Effect of Fed policy
According to Fed Futures, there is no sign of interest rates being reduced before September 2024. Earlier, there was a possibility of rate cut from May 2024. After the decision of the Fed, a big boom is being recorded in the bond market. The 10-year US bond yield has reached 4.45%, which is a 16-year high. Similarly, the 2-year bond yield is near 5.2%, which is the highest level in 17 years.