Yesterday, the Federal Reserve kept the benchmark rate between 2.25% and 2.50%, as expected. The central bank also stated that they feel comfortable with the policy that is currently in place and, for now, there is no need to move the interest rate in either direction. The recent round of trade talks between China and US have been quite productive. This is according to representatives from both sides. The Bank of England takes centre stage later on today.
The Fed Is Feeling Comfortable
Yesterday, as it was expected, the interest rates were held at the same level, between 2.25% and 2.50%. The Fed was quite happy with how things are progressing in the US economy, even though inflation is still on the lower side of their 2% target. It was pointed out that the expansion of the economic activity is still sustained, and unemployment is at its lows.
One thing that the Fed did lower was the interest on rate on excess reserves (IOER) – the money that the banks keep at the Federal Reserve. The IOER was seen climbing within the range of the benchmark rate and was sat at 2.40%. The Fed decided to lower that rate by 0.05%, bringing it to 2.35%. It is considered that, currently, banks are holding roughly around $1.5 trillion at the Federal Reserve.
Jerome Powell was seen quite relaxed talking about the state of the economy, yesterday, despite the constant pressure of lowering rates that he receives from President Trump. The President is trying to ramp up the public to put more pressure on the Fed, so that the rates would go down by at least 1%. Trump highlights that the key reason for such action is the...
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