The US Federal Reserve Announces Interest Rate Decision
Burc Oran
September 23, 2021
The US Federal Reserve has announced that the interest rate will remain unchanged, a decision that global markets have been waiting for.

The US Federal Reserve has announced that the interest rate will remain unchanged, a decision that global markets have been waiting for.

In the statement made by the Fed, it was stated that the decision to keep the interest rate constant was taken unanimously. Pointing out that the Federal Open Market Committee (FOMC) aims to achieve the maximum employment and 2 percent inflation target in the long term, it was reiterated that the supportive stance of monetary policy is expected to be maintained until these targets are achieved.

The statement said the target range for the federal funds rate was set to be between 0 and 0.25 percent.

Beginning in December last year, the bank has purchased assets of at least $80 billion per month in Treasury bonds and at least $40 billion per month in mortgage-backed securities purchases. It was emphasized that this situation would continue until “significant progress” is made in the targets of maximum employment and price stability.

The statement also emphasized that the economy has made progress in line with the said targets since then, adding, “If the development in the economy continues as expected, the Committee may decide to slow down the rate of asset purchases soon.”

Inflation Estimate Increased to 4.2 Percent for 2021

Announcing its forecasts for the economy, the Fed lowered its growth forecasts and increased its inflation forecasts and interest rate forecasts from 2022.

The Fed cut its growth forecast for the US economy this year from 7 percent to 5.9 percent, while increasing its inflation forecast from 3.4 percent to 4.2 percent. The growth forecast of the US economy for the next year was increased from 3.3 percent to 3.8 percent, and the 2023 forecast was increased from 2.4 percent to 2.5 percent. The long-term growth expectation for the US economy was 1.8 percent.

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