US Federal Reserve keeps rates unchanged amid hints of another increase this year as inflation remains high
Drop in consumer inflation from a year-over-year peak of 9.1% in June 2022 to 3.7% dampens Fed enthusiasm
The Federal Reserve left its key interest rate unchanged Wednesday at about 5.4% signaling a moderation in fight against inflation as price pressures ease. But Fed officials, who had raised the interest rates twice in the past three months, also hinted that the rate may be raised once again this year.
The Fed decision was prompted by a drop in consumer inflation from a year-over-year peak of 9.1% in June 2022 to 3.7%.
However, the unemployment rate is seen as still over the Fed’s target of 2%, and the monetary policymakers clarified that they were not close to declaring victory over the worst bout of inflation in 40 years. The Fed's latest decision means its benchmark rate remains at about 5.4%, that was reached after 11 rounds of rate hikes beginning in March 2022.
The Fed’s rate hikes calculated to guide the economy toward a “soft landing” of cooling inflation without triggering a deep recession have pushed up the consumer and business loan costs.
