The Federal Open Market Committee (FOMC) of the central bank, responsible for monetary policy, left the base interest rate unchanged at 3.50–3.75% for the fifth consecutive meeting.
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According to “CME FedWatch” data, most investors expected the FED not to change interest rates, but as the meeting approached, the number of those who thought they might be increased grew significantly.
Annual inflation in the United States fell to 3.5% last month, but it is believed that due to fluctuating oil prices, which react especially sensitively to D. Trump’s war with Iran, it will rise again.
The FED has a dual task – to keep inflation at the long-term target level of 2% and to ensure maximum employment in the world’s largest economy.
Its main tool to achieve these goals is setting the base interest rate. Increasing it usually restrains economic activity, while lowering it can stimulate employment but may also lead to higher inflation.
On Wednesday, it was decided not to change interest rates, which means that nine monetary policymakers believe the current rate level has an appropriate effect on economic activity.
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