Federal reserve will pause increase interest rates
The Federal Reserve’s monetary policy committee (FOMC) has announced its decision to hold interest rates steady for the first time since it began a rate-hiking campaign in March 2022.
Fed agrees to skip increase in rates
The Wednesday meeting of the FOMC has brought some sort of relief. The Federal Reserve has announced that it would pause its rate-hiking campaign following the Bureau of Labour Statistics report on May’s CPI.
Though the FOMC’s vote to skip a rate increase was unanimous, it also signalled that two more increases are likely this year as officials continue to battle high inflation.
The Federal Reserve’s post meeting Summary of Economic Projections noted that the officials agree that there should be a pause on its flurry of hikes. However, most officials think that additional hikes are necessary this year.
“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” the statement read.
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As a result of the decision, the benchmark rate will remain between 5% and 5.25%. It is the first meeting since January 2022 where the central bank has not hiked the federal funds rate.
Federal Reserve Chair Jerome Powell has come under fire for the institution’s strong-headed efforts to reduce inflation. Sen. Elizabeth Warren has accused Powell of intending to put millions of Americans out of work by enacting a string of severe rate increases that hinder economic expansion.
But Powell has stuck to his guns, repeating in his oft-repeated phrase that: “We’re committed to getting inflation back down to 2%, because we think that a failure to restore price stability would mean far greater pain later on.”
The Federal Reserve attempts to keep inflation rising at a rate of 2% per year, but since early 2021, it has been rising considerably more quickly than that.
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