US Interest Rates Unchanged Amid Fears of Worsening Economy

People and businesses in the US have faced a whirlwind of policy change in recent months. But one thing has remained fixed: borrowing costs set by the US central bank.

The Federal Reserve stuck with that strategy on Wednesday, leaving its key interest rate unchanged, even as officials’ expectations for the economy worsened.

The decision marked the fourth in a row without action, keeping the bank’s influential lending rate hovering around 4.3 per cent, where it has stood since December.

That came despite forecasts from policymakers suggesting they expect slower growth, higher unemployment and faster inflation than they did just a few months ago.

Typically, the Fed lowers borrowing costs if it believes the economy is struggling and raises them if prices start to rise too quickly.

President Donald Trump has repeatedly called on the Fed to cut interest rates, while pushing major changes to economic policy, including raising tariffs on goods from around the world.

Fed officials, who are empowered to set interest rates independent of the White House, have said they are worried that a one-time jump in prices due to those new levies could morph into a more persistent problem.

Inflation, the pace of price increases, remains above the Fed’s 2 per cent target, coming in at 2.4 per cent in May.