By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, September 24, 2023

Federal Reserve Chairman Jerome Powell speaks during a news conference following the Federal Open Market Committee meeting, Sept. 20, 2023, in Washington.

On September 20, 2023, the U.S. Federal Reserve released its decision on interest rates and updates on the economy. 

The Federal Reserve left its intereste rates unchanged, keeping the benchmark funds rate at a range of 5.25% to 5.5%. 

The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on reserve balances at 5.4 percent, effective September 21, 2023.

The Federal Reserve also released a statement indicating that it seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run, and in support of these goals, the Federal Reserve will continue to monitor economic conditions and adjust monetary policy as necessary.

The Fed’s decision not to raise rates on September 20, 2023, was based on a cautious approach to monetary policy and a desire to see more data on the economy and inflation before making any further decisions.

The decision not to hike rates was expected by many analysts, but the Federal Reserve’s statement on the economy and monetary policy had an impact on the stock and bond markets. 

The Federal Reserve’s decision to maintain the interest rate paid on reserve balances at 5.4 percent was seen as a signal that the Federal Reserve is taking a more hawkish stance on monetary policy. Overall, the Federal Reserve’s decision on September 20, 2023, was focused on maintaining the status quo on interest rates while signaling a more hawkish stance on monetary policy.

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The market’s reaction to the Federal Reserve’s decision on September 20, 2023, was mixed, with stocks falling and bond yields rising. The overall market reaction was negative, with U.S. stocks slumping and the Dow and Nasdaq closing lower after the announcement.

The Federal Reserve raises interest rates to achieve its monetary policy goals, which include maintaining price stability, promoting maximum employment, and supporting economic growth.

By raising interest rates, the Fed can slow down economic growth and reduce inflationary pressures. Inflation is back in the U.S. economy since 2021. The August 2023 U.S. consumer price index rose 3.7% on an annual basis, the U.S. Bureau of Labor Statistics said on September 13.

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© Copyright 2023 – Swann Collins, investor, writer and consultant in international affairs.