Economic outlook uncertain – still fighting inflation risks

The US Federal Reserve has held interest rates in a target range between 5.25% and 5.5%, a 23-year high, as the world’s largest economy continues to fight stubbornly elevated inflation, Andrew Michael writes. The Fed’s rate-setting Federal Open Markets Committee (FOMC) announced today that it would maintain US borrowing costs at the same level as they have been since July 2023. Explaining its decision, voted for unanimously by the 12-member FOMC, the Fed said: “The Committee judges that risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.” Earlier on Wednesday, official consumer price index (CPI) figures from the US Bureau of Labor Statistics showed that annual US inflation rose by 3.3% in the year to May, down slightly on the figure of 3.4% recorded a month earlier.