After hiking interest rates a number of times, the Federal Reserve (Fed) on Wednesday kept interest rates on hold for the third meeting in a row and at their highest since 2001.
As widely expected, the rate-setting Federal Open Market Committee held the Fed funds rate in a range of 5.25 to 5.5 per cent. In a statement after the meeting, Fed officials indicated that they don’t expect to raise interest rates any higher in their efforts to reduce inflation.
“You’re getting now back to the point where both mandates are important,” Fed Chair Jerome Powell said in a press conference after the meeting. “We’ll be very much keeping that in mind as we make policy going forward.” The Fed has a dual mandate to pursue price stability and maximise employment.
Meanwhile, the UK economy unexpectedly experienced a contraction in October as economic activity felt the impact of higher interest rates, fuelling hopes that the Bank of England would start to cut interest rates.
According to data published by the Office for National Statistics on Wednesday, gross domestic product declined by 0.3 per cent between September and October, as services activity slowed, and manufacturing and construction output contracted. According to Paul Dales, chief UK economist at the consultancy Capital Economics, the figure “suggests that the economy may go nowhere again in the fourth quarter, or perhaps is in the mildest of mild recessions”.
Finally, in India, consumer price inflation accelerated in November as food prices rose, data from the Ministry of Statistics and Programme Implementation showed on Tuesday.
Annual retail inflation climbed to 5.55 per cent in November from 4.87 per cent the previous month, albeit this was below forecasts of 5.7 per cent. Food inflation, which covers almost half of India’s overall consumer price items, soared to 8.7 per cent in November from 6.61 per cent in October. Even though food prices are normally volatile during the monsoon season, the current spike in food prices raises concerns of a hardening of the overall inflation level.
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