The US Federal Reserve (Fed) left the key rate unchanged. It remains at the level of between two and 2.25 percent, the Fed said yesterday after a meeting of its interest rate policy committee in Washington.
The central bank, however, promised further increases. Given the solid growth of the US economy, further „gradual increases“ in the prime rate are appropriate, the Fed said.
She had already raised the key rate three times this year and had been vehemently criticized by US President Donald Trump. The next meeting of the FOMC is in December.
Fed wants to cushion inflation
By raising interest rates, the Fed intends to prevent the economy from overheating and, in its view, excessive inflation. Currently, the rate of inflation in the US is about two percent – the value that the Fed considers the cheapest for price stability and a healthy labor market.
Even though the Fed’s rate hikes have always been modest, Trump accuses the central bank of jeopardizing the upswing in the US economy. He accused the Fed of „going mad“ in October and portraying the „biggest threat“ to its presidency. Trump criticized that the central bank raises the interest rate „too fast“ and is „too independent“ – the criticism is highly unusual.