The Federal Reserve kept interest rates unchanged, and the rate of reduction in treasury bond holdings slowed by more than half, but warned that inflation was not progressing. Traders slightly increased their bets on interest rate cuts.
On May 2, Beijing time, the Federal Reserve kept the federal funds rate target range unchanged at 5.25% - 5.5%, and continued to reduce it according to the plan. Below is the original text of this policy statement.
The Federal Reserve's May Policy Statement
Recent indicators suggest that economic activity continues to expand steadily. Employment growth remains strong, and the unemployment rate remains low. Inflation has slowed over the past year, but it is still high. There has been a lack of further progress in recent months in meeting the Commission's 2% inflation target.
The Commission aims to maximize employment and 2 per cent inflation over the long term. The Committee believes that the risk of meeting employment and inflation targets has moved towards a better balance over the past year. The economic outlook is uncertain, and the Committee remains very concerned about the risk of inflation.
To support its goal, the Commission decided to keep the target range of the federal funds rate unchanged at 5.25% - 5.5%. The committee will carefully evaluate the latest data, changing prospects, and risk balance when considering any adjustments to the federal funds rate target range. The committee anticipates that the interest rate target range should not be lowered until there is more confidence that inflation will continue to move towards 2%.
Furthermore, the Commission will continue to reduce its holdings of treasury bonds, institutional debt, and institutional mortgage-backed securities. Starting in June, the Commission will slow the decline in its securities holdings by lowering the monthly treasury bond redemption limit from $60 billion to $25 billion. The Commission will maintain a monthly redemption limit of $35 billion for institutional debt and institutional mortgage-backed securities, and reinvest any principal above this limit into treasury bonds. The Commission is strongly committed to returning inflation to the 2% target.
In evaluating appropriate monetary policy positions, the Committee will continue to monitor the impact of the latest information on the economic outlook. If there is a risk that could hinder the achievement of the Committee's goals, the Committee will be prepared to adjust its monetary policy position as appropriate. The committee's assessment will consider a wide range of information, including labor market conditions, inflationary pressures and inflation expectations, and financial and international developments.
