US Fed leaves interest rates unchanged as inflation cools

Washington: The US Federal Reserve has left interest rates unchanged at a 22-year high of 5.25 per cent to 5.5 per cent as inflation continued to cool, signalling an end to its rate hiking cycle and possible rate cuts next year.

“Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter,” the Federal Open Market Committee (FOMC) said in a statement on Wednesday after concluding a two-day policy meeting, the last in 2023, Xinhua news agency reported.

“Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated,” the committee said.

On inflation, the central bank is ‘making real progress,’ but ‘we still have a ways to go,’ Fed Chair Jerome Powell said at a press conference Wednesday afternoon.

“If you look at 12-month measures, you’re still well above 2 per cent -- you’re actually above 3 per cent on core through November PCE,” Powell said, referring to the Personal Consumption Expenditures price index, the Fed’s preferred gauge for inflation.

“No one is declaring victory. That would be premature. And we can’t be guaranteed of this progress,” Powell said. “So, we’re moving carefully in making that assessment of whether we need to do more or not.”

Over the past three months, payroll job gains averaged 204,000 jobs per month, “a strong pace that is nevertheless below that seen earlier in the year,” Powell said, noting that the unemployment rate remained low at 3.7 per cent.