The Fed keeps interest rates unchanged as inflation “remains somewhat elevated”

The Fed keeps interest rates unchanged as inflation “remains somewhat elevated”

The Federal Reserve keeps its interest rate unchanged, maintaining its target range at 4.25% to 4.5%. When the Fed sets a target for interest rate, it commits itself to adjusting the money supply. To lower the Fed Funds rate, the Fed’s bond trades buy government bonds, increasing the money supply which in turn lowers the…

Interest rate trajectory with changing inflation

Interest rate trajectory with changing inflation

The Federal Reserve uses interest rates as one of the many monetary policy tools to keep inflation at 2% and ensure full employment. Here’s how the terms in this relationship typically work: The relationship between the two can be summarized as follows: Lag Effect: Changes in the federal funds rate don’t immediately impact inflation. There’s…