US Federal Reserve leaves key interest rate unchanged - what happens next? Analysis by a financial expert

US Federal Reserve leaves key interest rate unchanged - what happens next? Analysis by a financial expert

According to a report by www.tagesschau.de, the US Federal Reserve has kept its key interest rate at a high level, thereby reaffirming its decisive stance in the fight against inflation. The Fed has maintained its strategy to combat inflation and will not cut interest rates for the time being.

By December, the central bank had planned several interest rate cuts for 2024. However, it has now made it clear that it needs to gain more confidence that inflation is moving sustainably towards two percent before loosening monetary policy. The central bank has also stopped talking about the possibility of raising interest rates, suggesting that rate cuts are more likely than rate hikes.

Fed Chairman Jerome Powell said the central bank was prepared to keep interest rates high for longer if necessary, but it would be appropriate to lower them "at some point this year." There is an expectation that the first rate cut will come after the upcoming meeting in March at the earliest. However, the robust US economy gives the central bank more scope to maintain its tight monetary policy for longer.

As a financial expert, I see this development as the Fed being cautious about possible interest rate cuts to continue fighting inflation. This could have implications for financial and investment markets as investors have been hoping for loose monetary policy to support the economic recovery. The Fed's dovishness could lead to short-term market volatility as investors wait for new information. In the long term, however, the stable economy could have a positive impact on the markets as it creates the basis for sustainable growth.