Despite still-elevated inflation and surprisingly strong economic growth in the third quarter, U.S. Federal Reserve officials unanimously agreed to keep the benchmark federal funds target range at 5.25% to 5.5% for the second policy meeting in a row.

Like the Bank of Canada, the Federal Reserve is trying to thread the needle between reducing inflation (via higher borrowing costs) and avoiding recession (by not raising borrowing costs more than necessary).

With no way of knowing for sure which signals will prevail, yesterday’s policy statement refers to the “strong” economic growth the U.S. has been experiencing (upgrading it from “solid” in the previous policy statement) and the dampening effects on inflation of tighter financial and credit conditions that will keep building over time.

Also like the Bank of Canada, yesterday’s decision by the Fed to hold off on another increase suggests it is taking a wait-and-see approach. If inflation cooperates, rates can stay where they are or even start to come down; if it doesn’t, rates will have to go even higher.

Uncertainty remains high, but we continue to think current interest rate levels in the U.S. and Canada are restrictive enough that the central banks will hold off on further increases.

The next interest rate announcement by the Federal Reserve is scheduled for December 13. The next Bank of Canada announcement is scheduled for December 6.

Answer to the previous trivia question: The European Union was created when the Maastricht Treaty came into effect on November 1, 1993.

Today’s trivia question: In what year did U.S. President Woodrow Wilson sign the Federal Reserve Act into law?