US Inflation Persists at 3%, The Fed Holds Interest Rates Again

Economics & Macro

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Adi Ahdiat 13/06/2024 17:13 WIB

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The Federal Reserve held the benchmark interest rate steady in June 2024. This decision was made because the US inflation rate remains persistent at around 3%, still short of the Fed's target of 2%.

US Inflation and The Fed's Interest Rates (January 2020-May 2024)

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US Inflation Persists at 3%, The Fed Holds Interest Rates Again

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US Inflation and The Fed's Interest Rates (January 2020-May 2024)

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On Wednesday, June 12, 2024, the United States Bureau of Labor Statistics reported that the US annual inflation rate in May 2024 reached 3.3% (year-on-year/yoy).

Although slightly lower than in April 2024, the US inflation rate has remained persistent in the 3% range since June 2023, as shown in the graph.

Shortly after the announcement, the US central bank, the Federal Reserve (The Fed), announced it would again hold the benchmark interest rate at 5.25%–5.5% in June 2024.

This marks the twelfth time the interest rate has been held since July 2023, as shown in the graph.

This policy was adopted because the US inflation rate is still far from the 2% (yoy) target.

"The Committee does not anticipate that lowering the [benchmark interest rate] range is appropriate until there is greater confidence that inflation is moving sustainably toward 2 percent," the Fed Committee said in a press release on Wednesday, June 12, 2024.

"In addition, the Committee will continue to reduce holdings of Treasury securities and mortgage-backed securities. The Committee is strongly committed to returning inflation to its 2 percent objective," they stated.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."