The Federal Reserve (Fed) maintained interest rates on Wednesday and noted that the US economy is growing at a “solid” pace despite recent hurricanes.
The meeting of monetary policy of the Fed met forecasts by analysts and maintained between 1.00% and 1.25% interest rates.
The statement that closed two days of deliberations gave few clues about what the Fed will do in December; a month in which the economic means take for granted that there will be a new increase in rates despite the low level of inflation.
The new meeting of the monetary policy committee of the Fed (FOMC) will be on December 12 and 13 as September analysts continue to estimate that there might be a third rate increase by end of the year.
In this regard, the Fed remains circumspect. However, they made reference in the broadcast of the acceleration with economic activity that was evident in the 3% economic growth of the third quarter.
The Fed stressed that despite the damage of hurricanes in the economy, the unemployment rate fell to 4.2% in September. The Fed is also very attentive to the narrowness of the labor market because it can trigger a rise in wages and inflation.
They avoided alluding to the massive tax cuts, especially to companies, which are being discussed in the White House and Congress, and may become a stimulus to the economy but at the risk of increasing the long-term fiscal deficit.
At the same time, the members of the monetary policy committee, which are divided on the speed of inflation, still think that, when volatile prices such as food and energy are eliminated, inflation remains weak.
The Fed observed that the price of fuels rose after the hurricanes and that “boosted inflation in September.” According to the PCE index, September inflation was 1.6% against 1.4% in August. However, the Fed expressly warned that these rates are below the 2% target considered optimal for the world’s largest economy.
The consequences of the hurricanes, especially the reconstruction tasks, “will have an impact on economic activity, employment and inflation in the short term, but past experiences suggest that hurricanes do not materially weigh on the economy’s prices in the medium term”
The Fed adds that consumers continue spending moderately and that company investments have accelerated.
The post The Federal Reserve maintains rates and highlights solid US growth appeared first on Conspiracy Talk News.
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