The Federal Reserve kept interest rates unchanged as expected, with the central bank opting to be more cautious as inflation cooled.
The decision came after policymakers at the Fed’s June meeting unanimously voted to hold the federal funds rate steady at 0.25 percent. This rate is used as the benchmark for widely used short-term interest rates.
The decision to leave rates unchanged signaled the Fed’s commitment to keeping its monetary policy accommodative to its dual mandate of maximizing employment and moderating inflation.
The Fed has been pushing for years for inflation, which fell to its lowest level in five years and currently stands at 1.2 percent. The Fed is aiming for a long-term average of 2 percent inflation.
The Fed noted that the labor market remains strong, however. The unemployment rate is at 3.7 percent, the lowest level since 1969.As consumers benefit from the strong labor markets, consumer spending has continued to rise and economic activity has been robust.
The Federal Reserve has been attempting to bring inflation back up to its target and maintain that level of inflation. The central bank has expressed its intention to keep using its current policies, including using monetary policy tools such as interest rates, to achieve its goals.
The central bank will have a special policy meeting later this month, giving it an opportunity to make further adjustments to its stance on interest rates or other policies, if needed.
The Federal Reserve’s decision to keep interest rates steady is a sign that the central bank is taking a cautious approach as it continues to monitor inflation. This decision will benefit consumers who have been benefiting from low borrowing costs and encourage spending and other economic activity.
