The Federal Open Market Committee today announced that it would once again hold the federal funds rate at its current level, leaving the target range unchanged at 5.25% to 5.5%. The decision marked the third time this year that the committee has left the rate untouched, with committee members last deciding to hold steady during their September meeting.
The FOMC first paused in June the series of rate increases that began more than a year ago. Speaking to reporters, Fed Chairman Jerome Powell noted that higher interest rates have led to a flattening in the housing market and are weighing down on business investment. Still, the labor market continues to show strength, with the U.S. economy adding an average of 266,000 jobs per month in the last three months. Powell said the question facing board members is whether monetary policy is restrictive enough to gradually return inflation to the FOMC’s 2% target, or whether further rate hikes will be needed. Rate cuts are not on the table right now, he added.
“What we can say is that financial conditions have clearly tightened and you can see that in the rates that consumers, households and businesses are paying, and over time that will have an effect,” Powell said. “We just don’t know how persistent it’s going to be, and it’s tough to try to translate that in a way that I’d be comfortable communicating into how many rate hikes that is.”
