US Federal Reserve, Federal Open Market Committee (FOMC) unanimously decided to keep interest rates constant.
FOMC meeting was the first meeting overseen by the new Fed Chairman Kevin Warshelected by the President Donald Trump He will replace former Chairman Jerome Powell.
The statement from the Fed was brief, indicating that the federal funds rate would remain in the 3.5%-3.75% range to support the Fed’s dual mandate of full employment and 2% inflation.
The Fed stated that economic activity continues at a good pace, but geopolitical activity such as the war with Iran adds uncertainty to the forecasts. Unemployment remains low, while productivity and investment remain strong. Currently inflation is stubbornly above the 2% target.
The press event held by President Warsh was also short-lived; Warsh offered some insight into the decision-making process and expressed interest in examining various data points to support the Fed’s decisions going forward. There was some discussion about artificial intelligence, during which Warsh expressed his belief that the development of artificial intelligence is good for America but could affect the economy.
The markets reacted accordingly; Short-term interest rates have risen as analysts continue to bet on which direction the economy will go and how the Fed will act going forward. There is a possibility that the Fed will increase interest rates towards the end of the year.
