Federal Reserve Holding Rates Steady

Source: Dukascopy Bank SA
Federal Reserve has decided to keep its key interest rate unchanged in a range of 3.5% to 3.75% to maintain economic stability. To ensure this target is met, they are paying banks 3.65% to hold their cash at the Fed and have set up "overnight" lending and borrowing rates to keep market activity strictly within that preferred window.



The Federal Reserve's strategy centers on a dual mandate from Congress: keeping prices stable and maximizing employment. While they have a fixed long-term goal of price stability, they do not set a fixed target for jobs because the labor market is constantly changing due to factors beyond their control.

To manage the economy, the Fed primarily adjusts the federal funds rate, though they will use other tools if interest rates get too low. They take a balanced approach, meaning they won't necessarily hike rates just because employment is high, as long as inflation stays near their 2% target.
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