“Fed Stands Pat as Inflation Nears Fresher Lows

The Federal Reserve announced today that they will keep interest rates steady, regardless of cooling inflation levels. This is the third consecutive time that the central bank has decided to keep the current interest rates in place. Interest rates are a key factor in the economic landscape. They are used to control how much money is available in the borrowing markets, as well as to influence the inflation rate. Lower interest rates mean that borrowers can take loans more easily, and, in turn, increase the money supply in the economy. This, in particular, is beneficial to businesses and households. Higher interest rates can be used to slow down an economy that is in danger of becoming overheated. The most recent decision from the central bank marks the continuation of a policy adopted at the start of this year. Even as the US struggles with the economic fallout caused by the pandemic, the Federal Reserve has held steady on keeping interests rates at near zero levels. This gave a much needed boost to businesses, helping stave off a long and deep recession. The Federal Reserve also indicated that maintaining interest rates at their current level would be beneficial in the longer term when it comes to cooling inflation levels. The central bank feels that this will help restore price stability and ensure that inflation levels remain low. The latest announcement is in line with expectations. It remains to be seen how the economy will react to the decision to keep interest rates steady at this time and whether it is enough to prop up the US economy in the face of the economic uncertainty that the country faces. Nonetheless, for now at least, it appears that the Federal Reserve is taking a cautious approach and ensuring that it does what it can to steady the ship.