New US Federal Reserve Chair Kevin Warsh announced that the Federal Open Market Committee (FOMC) would not move interest rates from their current 3.5 to 3.75%.
“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” said the Fed’s statement on the decision. “Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”
It added that while inflation remains elevated relative to the Committee's 2% goal, this reflected wider supply shocks that have driven price increases in certain sectors, including energy, but that it was still monitoring the situation and would move in future if necessary to “drive stability”.
Market sentiment from institutional investors in response to the move showed little surprise at the Fed holding rates steady, as it had widely expected.
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