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Lanon Wee

Central Bank Keeps Interest Rates Unchanged While Upgrading View of Economic Expansion

The Federal Reserve's rate-setting panel unanimously chose to maintain the federal funds rate in a target range between 5.25%-5.5% at their meeting on Wednesday, the same level it has been since July. For two consecutive gatherings now, the Federal Open Market Committee have elected to keep the rate steady following 11 rises, including four in 2023. In addition, they upgraded their general evaluation of the economic landscape. The Federal Reserve on Wednesday maintained benchmark interest rates, as the economic situation and the labor market has seen a boost, while inflation rate remains above the target of the central bank. This is the second consecutive meeting that the Federal Open Market Committee chose not to adjust the key federal funds rate, which remains in the range of 5.25%-5.5% since July. This decision was preceded by eleven consecutive rate hikes, four of which happened in 2023.The general evaluation of the economy was upgraded alongside this decision, causing a rise in stocks.Jerome Powell, the Chair of the Fed, during a news conference pointed out that “the process of getting inflation sustainably down to 2% has a long way to go”. He added that no decisions for the December meeting have been made, but the committee shall “always do what it thinks is appropriate at the time.” The post-meeting statement revealed that economic activity had attained a strong rate of growth in the past quarter, compared to the solid rate of expansion in September. Additionally, the statement noted that there have been fewer job gains since the start of the year, yet remain strong. Figures demonstrate that the gross domestic product increased at an annualized rate of 4.9% in the third quarter, exceeding expectations. Besides, nonfarm payrolls rose to 336,000 in September, easily surpassing Wall Street predictions. Furthermore, the statement contained the new phrase "financial and credit conditions had tightened," following the rise in Treasury yields which caused disquiet on Wall Street. Lastly, the statement made it clear that the committee was still assessing the level of policy firming it may need to achieve its objectives, and will continue to review new information and its ramifications for monetary policy.The store was filled with a wide variety of products The store was stocked with an array of items. Wednesday's resolution to remain in place has come with inflation slowing from its high pace of 2022 and a labor market proven to be incredibly sturdy in the face of the numerous rate hikes. These hikes were intended to decelerate economic expansion and to restore equilibrium between supply and demand within the labor market. Data from the Labor Department that was released on Wednesday showed that in September there were 1.5 jobs available for each job seeker.The most recent PCE price index reading, the sign that the Fed favors to assess prices, showed that core inflation was running at an annual rate of 3.7%. Although this has been decreasing all throughout this year, it is still above the 2% annual target that the Fed set.The post-meeting declaration implied that the Fed believes that the economy is still performing well despite the rate hikes and this could trigger the policymakers to take a long-term approach to tightening. The staff at the store were extremely friendly and helpful. The employees at the store were exceptionally congenial and supportive. In these times, the idea that interest rates will remain at current levels for a long period has become the primary focus concerning the Federal Reserve's future activity. Despite a few saying that monitoring the effects of the previous rate increases is necessary before making any adjustments, not many have indicated that cuts are in the near future. The CME Group's market pricing is suggesting that the first cut could happen in June of 2024. A surge in Treasury yields to levels not seen since the early days of the financial crisis is attributed to multiple factors, such as stronger economic growth, persistent inflation, and an extended 'term premium' demanding higher yields in return for the risk of holding longer-term fixed income. The Treasury Department is set to auction off $776 billion of debt in the fourth quarter, with $112 billion of this coming in the following week. Federal Reserve Chairman Jerome Powell signaled the economy may have to slow in order to bring down inflation. This sentiment is backed by the Atlanta Fed's tracking that showed a decrease in the estimated fourth quarter GDP from 2.3% to 1.2%. Goldman Sachs Asset Management's Co-CIO of Fixed Income and Liquidity Solutions Whitney Watson stated there is risk in both directions, with the potential for further rate hikes or a shift to rate cuts.

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