US Fed stays in pause mode, leaves rates unchanged
By S Jha
New Delhi, November 1: The US Federal Reserve on Wednesday left the rates untouched in a relief to the investors who have been battered with volatile geostrategic situations marring the sentiments. The US Federal Reserve, which has been seen to be mostly hawkish for past two years, stuck to the pause mode to allow the rates to stay in the range of 5.25 to 5.50 per cent.
The US Federal reserve in an accompanying commentary noted that the economy remains strong. Yet, the Central bank also admitted that the Households are under stress due to higher costs of borrowings. The admission of the pain of the households is seen to be an admission on the part of the hawkish Fed that it has been testing the limits of the people with rates at 22-year high.
“The Federal Reserve held interest rates steady on Wednesday but left the door open to a further increase in borrowing costs in a policy statement that acknowledged the U.S. economy’s surprising strength, but also nodded to the tighter financial conditions faced by businesses and households,” Reuters said in a report on Wednesday.
The US Federal Reserve has not touched the rates since July this year. Yet, it has always struck hawkish tone, warning that there could be more rate raises in the future to tame the inflation. The strong economic numbers in the US have been aiding the hawkish tone of the Federal Reserve.
Dow Jones was reacting positively to the pause mode of the US Federal Reserve with the index rising by 111 points, 0.35 per cent, at the time of the writing of the report.
But the Indian indices tanked during the day as the fear factor gripped the investors ahead of the decision of the US Federal Reserve which had been deliberating the policy rates. The decision to stay with the pause mode was unanimous.
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