Federal Reserve Keeps US Interest Rate at 3.50%-3.75%

Washington, July 29 (KUNA) -- The Federal Reserve (the U.S. central bank) kept interest rates unchanged on Wednesday at a range of 3.50 to 3.75 percent, marking its second decision since new Chair Jerome Powell assumed office. In a statement following the conclusion of its Federal Open Market Committee (FOMC) meetings, the Fed said, “The Committee decided to maintain the target range for the federal funds rate at 3.50 to 3.75 percent,” in support of the Federal Reserve’s dual mandate. It noted that the committee “continues its policy of maintaining ample reserves in the banking system.” The decision was approved by nine votes in favor of keeping the interest rate range unchanged, with three votes against.

The statement clarified that “economic activity has expanded at a strong pace despite elevated uncertainty, partly stemming from the conflict in the Middle East.” It also pointed out that productivity and capital investment growth “remain robust,” while job gains have kept pace with labor force growth and the unemployment rate has remained largely unchanged. However, it emphasized that inflation “remains elevated relative to the Committee’s 2 percent goal, partly reflecting supply-side shocks that have pushed up prices in certain sectors, including energy,” and affirmed that the Committee “is committed to achieving price stability.”

The Fed’s decision came after U.S. Treasury yields rose, ending a three-day decline, as crude oil prices climbed amid renewed tensions in the Middle East. The yield on the 10-year U.S. Treasury note—the benchmark for U.S. government borrowing—rose by more than 3 basis points to 4.641 percent. The yield on the 2-year Treasury note, which more closely reflects the Fed’s short-term interest rate policy, increased by more than 4 basis points to 4.324 percent, while the yield on the 30-year Treasury note rose by 2 basis points to 5.116 percent. One basis point equals 0.10 percent, and yields and prices move in opposite directions.

On the economic data front, investors are awaiting tomorrow’s release of the U.S. Personal Consumption Expenditures (PCE) price index for June, the Fed’s preferred gauge for tracking inflation, along with second-quarter gross domestic product (GDP) data for the current year. (End) R.S.R./H.S.S.