As Expected, Fed Opts Not to Raise Rates--But Says It May in Future

WASHINGTON–As expected, the Federal Reserve has adjourned its meeting here without raising rates, but it also indicated it could again do so in the future.

The decision means rates remain at a two-decade high. The adjournment without action marks the second consecutive meetings at which the Fed has not raised rates, it the longest period without an increase since it began to lift rates from near 0% in March 2022.

In announcing it would maintain the Fed Funds rate at a range of 5.25% to 5.50%, the Fed said in a statement that recent indicators suggest economic activity expanded at a strong pace in the third quarter, job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated.

Federal Reserve

‘Prepared to Adjust’

“The (Federal Open Market Committee) would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals,” the Fed said. “The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

Overall, the Fed said “The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain,” the Fed said. “The Committee remains highly attentive to inflation risks.”

The Fed said its Open Markets Committee will continue to assess additional information and its implications for monetary policy, and that it will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. 

Reducing Holdings

In addition, the Fed said it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans.