The Federal Reserve agreed to maintain its benchmark interest rate near zero at a meeting last week. The move, which was expected, continues to keep borrowing rates low to encourage economic growth after the coronavirus lockdowns of last year.
Federal Reserve Keeps Interest Rates Low in July Meeting
The U.S. Federal Reserve is maintaining historically low interest rates for the foreseeable future, even as the economy continues to show signs of growth. The Fed’s Federal Open Market Committee (FOMC) unanimously approved the measure, which keeps borrowing rates in a target range between zero and 0.25% during its July meeting.
The move by the FOMC wasn’t unexpected but came as the U.S. economy continues to show signs of growth after the COVID-19 lockdowns of 2020 and as inflation continues to rise. The Inflation rate for 2020 was officially 1.4%, though the average consumer experienced a real inflation rate of 5.4%.
Less Economic Impact with Each Wave
“Our approach here has been to be as transparent as we can. We have not reached substantial further progress yet,” said Chairman Jerome Powel. “We see ourselves having some ground to cover to get there.
“What we’ve seen is with successive waves of COVID over the past year, and some months now, there has tended to be less in the way of economic implications from each wave,” he continued in a post-meeting press conference. “We will see if that is the case from the delta variety.”
U.S. Economy Continues to Surge
Despite Powell and the FOMC’s cautiousness, the U.S. economy is once again surging. The Dow Jones Industrial Average growth was approximately 8.4% from April to June, the highest rate since 1983. Borrowing rates are expected to remain at historic lows until late 2022, making it a perfect time for consumers to refinance credit cards, loans, and mortgages, or even apply for a new credit card.
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