The fed keeps interest rates steady
For a while now, the Fed was expected to raise what had been steady interest rates. Today, Thursday, they announced they would keep the rates steady. It will keep its benchmark rate near zero, allowing job growth to continue.
The Fed’s federal funds rate is the interest rate the Fed charges for banks to lend to one another overnight. They will keep it between 0 and 0.25%, where it has been since the height of the economic crisis in December 2008. The Fed is preserving a low cost of credit for businesses and consumers , and maintaining job growth by doing so because demand for goods and services will remain high enough that workers are needed.
The Federal Open Market Committee will have the chance to raise rates again on Oct. 27.
Why postpone a raise? Fed officials in recent weeks expressed concerns when China and other emerging markets had a negative affect on our stock markets here in the United States.
According to the Huffington Post, “William Dudley, president of the Federal Reserve Bank of New York, expressed those concerns in remarks he made on Aug. 26, calling a September rate hike “less compelling” than it had been in the weeks prior.”
This news also means that the stock prices will most likely rise because investors will maintain comfortable without more expensive credit. It is expected that they will be reassured and continue to invest.
While maintaining a healthy job market is an important side effect of this decision, the Fed and FOMC made the decision based on low inflation from drop in oil prices and turbulence in world markets.
“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the FOMC said.
Keeping rates low for now will help inflation and maintain a healthier economy.
“This is a victory for the working families who stepped up with innovative organizing to send the Fed a clear message: Our voices belong in the debate about our economy,” said Ady Barkan, director of the Fed Up campaign, a coalition of progressive groups, in a statement. “With the recovery still far too weak in too many communities, it would have been economically devastating – and immoral – to slow the economy.”
This is big and great news for everyone in the United States. The job market will continue on a positive path and our economy all around is better off because of this decision.
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