Khaberni - The Federal Reserve (the American central bank) decided to keep the interest rate unchanged at the first meeting under its new chair, Kevin Warsh.
The council unanimously kept the main overnight interest rate unchanged in the range of 3.50% to 3.75%, reaffirming the committee's commitment to achieving price stability, while renewing its policy to maintain ample reserves in the banking system and instructing the Office of Open Market Operations to increase securities holdings when appropriate.
Federal policymakers notably raised their average interest rate forecast to 3.8% by the end of 2026 compared to 3.4% in previous forecasts, and they raised their expectations for 2027 and 2028 to 3.6% and 3.4% respectively, according to "Reuters".
Amid division among bank officials over whether to keep interest rates steady or increase them this year, the bank's estimates indicate the possibility of raising the interest rate by 25 basis points during this year, followed by reductions of 25 basis points in 2027 and another 25 basis points in 2028.
The updated economic forecasts showed the Federal Reserve raising its estimates for inflation of personal consumption expenditures (PCE) by end of 2026 to 3.6% compared to 2.7% in last March's forecasts, and core inflation was raised to 3.3% compared to 2.7%.
The Federal Reserve explained that inflation is still high compared to its target of 2%, which partly reflects supply shocks that have caused price increases in certain sectors, primarily the energy sector.
Regarding growth, the Federal lowered its projections for American GDP growth in 2026 to 2.2% compared to 2.4% in the March estimates, while maintaining its longer-term growth forecasts unchanged at 2.0%.
The statement confirmed that economic activity is expanding at a strong pace despite the high level of uncertainty partly due to the conflict in the Middle East, indicating that productivity and capital investment are recording strong levels.
In the labor market, central bank officials expect the unemployment rate to reach 4.3% by the end of 2026, compared to 4.4% in March forecasts, noting that job gains have kept pace with the growth of the workforce and that the current unemployment rate has not changed significantly.
