On Nov. 1 (Wednesday), the U.S. Federal Reserve announced it would be holding rates steady at 5.25 to 5.5 percent as the central bank sees how its aggressive credit tightening scheme filters through the American economy and what effect it would have on a lingering inflationary environment.
It is widely believed that the Fed will not be implementing any more interest rate hikes in 2023, nor will interest rates be dropping, offering little relief to American mortgage holders and keeping the cost of credit significantly higher than pre-pandemic levels.
Recent rate hikes have been implemented in a bid to slow inflation, which appears to have peaked this year around 9 percent however, has dropped significantly.
According to Trading Economics, the U.S. inflation rate remained steady at 3.7 percent in September, defying market expectations of a slight decrease to 3.6 percent.
While inflation appears to be decelerating, it still remains stubbornly higher than the target of 2 percent.
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Wednesday’s outcome was expected by most economists and investors. The chief investment officer at Wilshire, Josh Emanuel, told CNBC, “There’s no likelihood that the Fed will do anything here. It wouldn’t make sense at this meeting. But, what is the messaging? My sense is that Powell is going to want to be very measured and careful about sounding too hawkish. He’s managed to thread the needle here very well.”
U.S. stocks experienced a noticeable bounce following the Fed’s announcement with the S&P 500 rising more than one percent and the Dow Jones Industrial Average gaining almost 0.7 percent. The tech heavy Nasdaq gained 1.6 percent.