5.25 to 5.5 percent

US Federal Reserve leaves key interest rates unchanged

The US Federal Reserve has once again left its key interest rate unchanged. Interest rates will therefore remain between 5.25 and 5.5 percent for the time being, as announced on Wednesday.

This means that interest rates remain at their highest level in 23 years. They have risen steadily or remained the same since July 2022. The trend in interest rates is also the same in the eurozone. Here, the most recent figure was 4.5 percent, which was slightly lower.

In a statement on the Fed's key interest rate, it says that "further progress" is lacking in the effort to push inflation to two percent. A reduction in the key interest rate is not appropriate until then. The key interest rate is the rate at which commercial banks can borrow money.

Here you can see how key interest rates have developed since 2022.

Stock markets barely reacted
The last increase was last summer. If interest rates rise, private individuals and companies have to spend more money on loans or borrow less money. Growth declines, companies cannot pass on higher prices indefinitely and, ideally, the inflation rate falls as a result. If interest rates are too high, there is a risk of recession.

The US stock markets barely reacted to the interest rate decision on Wednesday. The Dow Jones extended its gains slightly and the Nasdaq Composite also turned slightly positive.

Expectations severely dampened
Investors had actually priced in several interest rate cuts for this year, but recently expectations had already been severely dampened due to inflation.

The US Federal Reserve, which decided on the key interest rate on Wednesday evening, wants to dampen inflation with a tight monetary policy. The financial markets are now hoping that Federal Reserve Chairman Jerome Powell will give them an indication of the future course. The next forecast is due in June. It is expected that interest rates could be reduced in September at the earliest.

Surveys show that Biden's voters are dissatisfied with the US President's economic policy. The main reason for this is high consumer prices.