US Fed holds interest rates steady citing ‘elevated’ inflation
Summary
The U.S. Federal Reserve decided to keep interest rates steady at 3.50-3.75% due to ongoing inflation pressures, especially from higher fuel prices linked to tensions between the U.S. and Iran. The Fed aims to bring inflation down to its 2% target while navigating uncertain economic factors and has removed its usual forward guidance under new Chairman Kevin Warsh.Key Facts
- The Federal Reserve held interest rates at 3.50-3.75% during its latest meeting.
- Inflation remains above the 2% goal, partly because of supply shocks and rising energy prices.
- New Fed Chairman Kevin Warsh has stopped giving forward guidance, which usually helps predict future rate moves.
- Three members of the 12-person Federal Reserve committee voted to raise rates by 0.25%.
- Consumer inflation fell by 0.4% in June, the first monthly decline since April 2020.
- Annual inflation is 3.5%, down from 4.2% in May, but still higher than desired.
- Gas prices rose to an average of $4.09 per gallon, up from $3.86 last month and $2.98 in February.
- Consumer confidence has dropped for three months in a row, reflecting economic concerns.
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