ADSS FED CHAIR JEROME POWELL'S COMMENTS
By Ovunc Kutlu
ISTANBUL (AA) - The US Federal Reserve skipped an interest rate hike Wednesday, as widely expected, and kept its federal funds rate unchanged between the 5.25% - 5.5% target range.
"Recent indicators suggest that economic activity expanded at a strong pace in the third quarter," it said in a statement.
"Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low," it added, replacing "Job gains have slowed in recent months" in a previous statement.
The Federal Open Market Committee (FOMC), however, noted that inflation remains elevated.
The decision to keep rates unchanged was unanimous as all 12 members of the Committee voted in favor of the move.
While it is the third interest rate skip by the Fed after it skipped a hike in June and another in September, the federal funds rate remains at its highest in 22 years.
The central bank raised rates by 525 basis points from March 2022 to July 2023 in 11 meetings to fight record inflation that climbed last summer to its highest in more than 40 years.
After soaring to 9.1% in June last year, annual consumer inflation dropped to 3% this June, but climbed to 3.7% in August.
Fed Chair Jerome Powell said the process of getting inflation sustainably down to the bank's 2% target has "a long way to go."
"Persistent changes in broader financial conditions can have implications for the path of monetary policy. In this case, the tighter financial conditions were seen from higher long-term rates but also from other sources like the stronger dollar and lower equity prices could matter for future rate decisions," he said in a post-meeting news conference.
Powell said higher Treasury yields are showing higher borrowing costs for households and businesses, and the higher costs weigh on economic activity, noting that mortgage rates are nearing 8%.
The chair also noted that FOMC members have not yet made any monetary policy decisions about future meetings. "We are not confident at this time that we've reached such a stance," he said.
The Fed will get two more inflation and two additional labor market readings before its meeting in December, he noted.
Powell stressed that the FOMC is "not thinking about rate hikes at all" but focused on whether the Fed has achieved a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time and sustainably.
He added that the bank is also focused on how long its monetary policy will remain restrictive.