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BusinessUnited States of America

US Fed holds interest rates steady at 22-year high

November 1, 2023

The US Federal Reserve has said it would hold benchmark interest rates steady at its current 22-year high, but left the door open to further hikes if the inflation rate accelerates.

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Federal Reserve Board Chairman Jerome Powell at a podium
Federal Reserve Board Chairman Jerome Powell has pledged to fight inflation down to a 2% targetImage: Drew Angerer/Getty Images

The Federal Reserve on Wednesday unanimously agreed to hold interest rates steady in a target range between 5.25%-5.5%, where it has been since July.

"The fact is the committee is not thinking about rate cuts right now at all," Federal Reserve Chair Jerome Powell told a press conference. 

The decision to hold rates high was widely expected, given the Fed's stated goal of slowing inflation to a long-term target of 2%. 

US markets jumped higher after news broke. The Dow Jones Industrial Average advanced 223 points, or 0.7%. The S&P climbed 1.1% and the Nasdaq Composite climbed 1.6%.

Not the end of rate hikes, yet

The Fed chair said the central bank's policymakers recognize the effects of their rate hikes have yet to be fully felt in the economy and that they want to take time to assess the impact.

Powell said holding rates at a steady high allows for a "better sense of how much more we need to do, if we need to do more."

The Fed launched its most aggressive series of rate hikes in years in March 2022 to fight inflation. It has now slowed down and raised rates only once since May.

While annual inflation has fallen from its peak last year, it still remains at 3.7%, well above the Fed's 2% annual target.

Powell expressed confidence that inflation, despite some signs of persistence in the most recent monthly data, is still heading lower even as the economy has kept growing.

"The good news is we're making progress," Powell said. "The progress is going to come in lumps and be bumpy, but we are making progress."

rm/wmr (Reuters, AFP, dpa)