Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. The current interest rate, 5% to 5.25%, is the highest since 2007, before the 2008 financial crisis. The increases varied from 0.75% in the summer and fall, when inflation was at its highest, to increases of 0.25% seen this spring. The Fed has raised interest rates 10 consecutive times – a pace not seen since the 1980s – since March 2022, when the interest rate was zero. “It’s just the idea that we’re trying to get this right,” he said. Powell noted that a pause “gives us more information to make decisions” and “allows the economy a little more time to adapt as we make our decisions going forward”. “It may make sense for rates to move higher, but at a more moderate pace.” “We want to see it move down decisively,” Powell said. The Fed is closely watching core inflation, which measures the price increases of goods and services excluding the volatile food and energy sectors, which have remained relatively stable over the last few months, even as the overall inflation rate has fallen. ![]() ![]() ![]() He added: “Inflation has moderated somewhat since the middle of last year, nonetheless, inflation pressures continue to run high and the process of getting inflation down to 2% has a long way to go.” “Looking ahead, nearly all committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to 2% over time,” Powell said, before warning that inflation was still a problem in the US economy. Interest rates make borrowing money, particularly for mortgages or other loans, like car payments and student loans, more expensive.Īt a press conference on Wednesday following the Fed’s announcement, chair Jerome Powell said that further rate increases were likely. The FOMC said in a statement: “Holding the target range steady at this meeting allows the committee to assess additional information and its implications for monetary policy … In assessing the appropriate stance of monetary policy, the committee will continue to monitor the implications of incoming information for the economic outlook.”Įven with the pause, Fed officials suggest further increases may come depending on how close the economy gets to their target of 2% inflation.
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