NEW YORK: The US Federal Reserve has opted to maintain its interest rates within a range of 5.25% to 5.5%, marking the second pause following a series of aggressive hikes since early 2022.

The decision raises questions about the Fed’s next move, as rising borrowing costs strain households and businesses in the world’s largest economy.

Fed Chairman Jerome Powell dismissed the notion that pausing implied a reduced likelihood of future hikes, stating that “raising rates again after a brief pause is still a possibility.”

While US inflation has dropped from 9.1% to 3.7%, it remains well above the Fed’s 2% target. The central bank continues to assess the need for additional policy measures given “strong” economic activity, a robust job market, and “elevated” inflation.

Powell emphasized that the rate-setting committee is not currently considering rate cuts but rather debating whether further hikes are warranted.

Meanwhile, the Bank of England is expected to keep interest rates unchanged for the second consecutive time, mirroring the Fed’s cautious approach. Analysts anticipate that the Fed may resume rate cuts in the first half of the next year as the case for further hikes gradually diminishes.

Bank of England’s Thursday Forecast: No Change in Interest Rates Amid Recession Concerns