The Fed Will Hold Its Benchmark Interest Rate. United States (US) central bank officials, namely the Federal Reserve or The Fed, appear to be giving a signal to hold the benchmark interest rate because they are waiting for more evidence that inflation in the United States (US) is cooling.
San Francisco Fed President Mary Daly told a central banking conference in Frankfurt, Germany, that the Fed was not sure whether it was doing enough to keep inflation on track to reach its 2% inflation target.
Meanwhile, according to him, the full impact of the rapid increase in interest rates may still occur. This uncertainty is considered to require “patience” and “measured” policy adjustments.
At the same time, Daly said he communicated “resolve.” This word is usually used by central bank governors to show that they do not rule out raising interest rates, if such an effort is necessary.
Boston Fed President Susan Collins also said that the Fed needed to be patient and firm, and that I would not take additional tightening steps. The US central bank last year has aggressively raised short-term borrowing costs.
Then, in July 2023, the Fed also delivered what many analysts believe will be the last rate hike in the US’ current fight against inflation. Collins also said that with the labor market rebalancing and inflation still being too high, the main point according to him was the need to really stay on the right track.
After the Fed’s decision in September 2023 to keep interest rates in the current range of 5.25%-5.50%, a number of US central bankers cited rising long-term bond yields as one of the reasons why the Fed does not need to tighten policy again.
The Fed Will Hold Its Benchmark. The Fed’s minutes from the 31 October – 1 November 2023 first meeting will also be released in the early hours of Wednesday (22/11) and will explain how much impact the rise in bond yields had on the Fed’s decision to keep interest rates unchanged.