U.S. Fed skips rate hike, keeps interest rate unchanged between 5.25% - 5.5%

The U.S. Federal Reserve skipped an interest rate hike Wednesday, as widely expected, and kept its federal funds rate unchanged between the 5.25% - 5.5% target range.

"Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter," it said in a statement at the end of its last two-day meeting for 2023. The statement replaced "economic activity expanded at a strong pace" in its Nov. 1 statement.

The Federal Open Market Committee (FOMC), however, also added to the latest statement: "Inflation has eased over the past year."

The decision to keep rates unchanged was unanimous as all 12 members of the Committee voted in favor of the move.

While it is the fourth interest rate skip by the Fed this year, after June, September and November, the federal funds rate remains at its highest in 22 years. The bank last made a rate hike of 25 basis points July 26.

The central bank raised rates by a total of 525 basis points from March 2022 to July 2023 in 11 meetings to fight record inflation that climbed last summer to its highest in more than 40 years.

After soaring to 9.1% in June last year, annual consumer inflation dropped to 3% in June, but climbed to 3.7% in August before slowing to 3.1% in November.