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Shortly after the US midterm elections, the US Federal Reserve voted to keep the benchmark interest rate the same at 2 to 2.25 percent.
Just days after the US midterm elections, the US Federal Reserve has voted to keep the benchmark interest rate the same at 2 to 2.25 percent.
The unanimous decision from the Fed came as anything but a surprise — many anticipate that any hikes will come later in the year during the central bank’s December meeting.
According to a statement, the Fed anticipates “further gradual increases” will come alongside economic growth, strong labor market conditions and inflation.
“In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective,” the statement reads.
It continues, “[t]his assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”
The gold price didn’t have a strong reaction to the central bank’s statement, and was down 0.22 percent at US$1,223.40 per ounce as of 2:55 p.m. EST.
However, the build up to the Fed meeting created some volatility for the precious metal — gold hit a one-week low on Thursday (November 8) in the hours before the meeting, dipping as low as US$1,221.
Higher interest rates are generally detrimental for non-interest-bearing assets like gold and silver. The white metal lost ground on Thursday as well.
The Fed also notes that the US unemployment rate has declined since its September meeting, with the labor market further strengthening and economic activity continuing to grow.
While household spending continues to show strong growth, business fixed investment “moderated” from the fast pace it saw at the beginning of the year.
Additionally, overall inflation and inflation for items aside from food and energy remained near 2 percent on a 12-month basis.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.
