US Federal Reserve leaves interest rates unchanged - financial experts await the statement from Federal Reserve Chairman Jerome Powell

US Federal Reserve leaves interest rates unchanged - financial experts await the statement from Federal Reserve Chairman Jerome Powell

It has been official for a few moments: The US Federal Reserve left the interest rate unchanged at 5.25 - 5.5 percent in today's interest rate decision, as many experts expected. However, this does not guarantee that there will be no further interest rate increases. Rather, the pressure has now shifted to the December meeting and we will continue to closely monitor how inflation and the economy develops. Investors are now eagerly awaiting Central Bank Chairman Jerome Powell's statement at the press conference.

The US Federal Reserve left its interest rates unchanged for the second time in a row. The key interest rate remains in the range of 5.25 to 5.5 percent – ​​and is therefore at its highest level in more than 20 years. The Federal Reserve (Fed) raised the key interest rate eleven times in 16 months in the fight against high inflation - most recently by 0.25 percentage points in July. It is one of the fastest and sharpest interest rate hikes in its history. The central bankers then took a break in September – just as they did in June. Wednesday's decision marks the first time since the beginning of last year that the Fed has left the key interest rate unchanged at two meetings in a row. When making decisions, the Federal Reserve weighs up the risk of inflation and the risk of the economy slowing too much.

The effects of this decision can be diverse. On the one hand, the unchanged interest rates slow down price increases, which is positive for combating inflation. On the other hand, higher interest rates can hurt consumer spending, a key pillar of the U.S. economy. It is becoming more expensive to buy houses or cars on credit. There is therefore the possibility that consumers will be slowed down in their enthusiasm for consumption.

The latest economic data shows that while inflation remains higher than the Fed's target, it is moderating while economic growth remains high. The US economy recorded its strongest growth in seven quarters in the summer. This poses the risk that inflation could pick up speed again.

The Fed's decision to leave interest rates unchanged for now could result in several further developments in the market. Some experts in the US see a possible interest rate hike as early as December or next year if the economy remains strong. On the other hand, defaults in servicing loans have recently increased and there have been complaints about increasingly tight finances. This could suggest that consumer spending may be cooling even without further interest rate hikes.

According to a report by The shareholder The probability of an interest rate hike in December is currently around 20 percent, as the FedWatch tool shows. It remains to be seen how the situation will develop and what decisions the US Federal Reserve will make in the future.