US Federal Reserve keeps interest rates unchanged amid rising inflation

Despite inflation continuously rising in the US, the Federal Reserve made no changes to interest rates on Wednesday. Out of the 12 members of the Federal Open Market Committee, 10 members voted to keep the interest rate unchanged between 3.75 to 4.00 per cent. Two members expressed a differing opinion in favour of a 0.25 per cent increase in the interest rate, according to a report by The Hindu.

The Federal Reserve stated in a statement that collecting more information will help the committee determine the appropriate policy to bring inflation to the 2 per cent target. After increasing interest rates in September for the first time in three years, the Federal Reserve is now awaiting more data. Two members of the committee, Governor Lisa Cook and Cleveland Fed President Beth Hammack, wanted an immediate 0.25 per cent increase in the interest rate.

The issue of inflation in the US is becoming significant, especially before the mid-term elections in November. In September, American consumer inflation was recorded at 3.7 per cent, which is close to the three-year high seen in May. The Federal Reserve has failed to achieve its long-term inflation target of 2 per cent for the last five years. According to the South China Morning Post, this decision was in line with market expectations.

Inflation has risen due to increases in energy prices and tariff policies in the US. Meanwhile, the Fed has stated that economic activity in the US is expanding at a 'strong' pace. On the other hand, Canada's central bank increased the interest rate to 2.5 per cent on Wednesday. The unemployment rate in the US has remained stable at around 4.2 per cent for the last one year.