The United States Fed decided to keep interest rates stable, remaining in the range between 5.25% and 5.50%, their highest in almost a quarter of a century. This decision was announced following the conclusion of its two-day monetary policy meeting, a meeting that was marked by intense discussions on the current state of the economy and the next steps in the fight against inflation.

Over the past few months, the federal funds rate has remained unchanged, a decision that reflects continued concern about limited progress in reducing inflation. “In recent months, there has been a lack of further progress toward the committee’s 2% inflation target,” monetary policymakers stated. This lack of significant progress in bringing down inflation suggests a more cautious stance on the part of the Fed.

In addition to maintaining interest rates, the Fed announced adjustments to the pace of reduction of its general balance sheet. Starting June 1, the monthly reduction in Treasury bond authorization will be slowed from $60 billion to $25 billion, while the limit for mortgage-backed securities will remain at $35 billion monthly. These measures aim to avoid destabilization in market liquidity, a concern derived from previous experiences, particularly that observed in 2019.

“The Committee does not expect it to be appropriate to reduce the target range until it gains greater confidence that inflation is moving sustainably towards 2 percent,” officials said. This caution is supported by recent inflation data, which continues to exceed expectations. The core personal consumption expenditure index, excluding volatile food and energy prices, recorded a 2.8% annual increase in March, a figure that reiterates the persistence of inflationary pressures.

The maintenance of rates and the modification of the balance sheet reduction program reflect a deliberate strategy to anchor inflationary expectations and maintain economic stability, avoiding abrupt swings that could negatively affect financial markets and the broader economy.


The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.


Leave a Reply