Fed holds interest rates at 5.25%

[Kizen]

The Federal Reserve kept the interest rates unchanged at 5.25% after 18 months of successive rises. US stock market rose as expectations that the rise in interest rates is unlikely. It seems with the intension to moderate the inflation the fed had taken this decision.
The recent fall in consumer prices were not able to control the inflationary pressure. Few reasons like Slowing Economic growth and volatility in oil prices may be forcing the fed to hold interest rates. This hold may continue until the inflationary pressure comes to control and anyway this holding is a good sign and encourages the borrowings.



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[patanx]

The Federal Reserve, after an unbroken two-year stretch of raising interest rates, may now be entering a prolonged period where the central bank keeps rates unchanged.
It could be next June or later before the Fed makes any change in interest rates because of the opposing forces buffeting the economy at present.

Analysts hold that view because they think inflation is likely to linger at levels that will keep the Fed from cutting rates and economic growth will be too slow to think about raising rates.

The central bank, in announcing Wednesday that it was keeping the federal funds rate unchanged for a third straight meeting at 5.25%, cited the twin dangers it is confronting.



The Fed statement said core inflation, which excludes energy and food, remained at "elevated" levels even as overall economic growth has been slowing, reflecting in part the slowdown in housing.