US Fed maintains target range: FOMC

Sep 22, 2023

Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated.

The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.

The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.

In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

In the International market, the movement of the yellow metal will majorly depend on the economic data in the West, the intensity of the recession in the US along with the global geo-political conditions said, Colin Shah, MD, Kama Jewelry.

However, with the onset of the festive season in the domestic market, this pause will give a much-needed boost to gold prices as the purchase of gold during this season is considered to be auspicious. This will further drive the demand for gold in this period.

The current pause is in result of the estimation of a hike in the rates in the near future considering that inflation is not in control. Having said that, we need to wait and watch the outcome of the next Fed meeting as it will play a major role in defining the gold prices right ahead of Dhanteras, Colin adds.

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