According to recent reports, the US Federal Reserve (Fed) has chosen to keep its policy interest rate range at 5.25%-5.50% for the second consecutive time during its November meeting. This decision comes in spite of the U.S. economy exhibiting resilience, achieving a 4.9% real GDP growth rate in Q3, driven by increased consumer spending supported by robust employment and wage growth.
Worries about a potential economic slowdown are escalating as long-term U.S. interest rates surged to a 16-year high of 5% in October, coinciding with a rise in Treasury yields. Additionally, uncertainty surrounds U.S. consumer spending as student loan repayments resume after pandemic-related suspensions.
David Kohl, Chief Economist at Julius Baer, predicts that the Fed will maintain unchanged interest rates until Q3 2024, given the strong economic growth and decreasing inflation. In response to the global economic climate, other central banks have also opted to keep their interest rates steady.
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