As part of its continued effort to control inflation, the Federal Reserve increased its benchmark interest rate on Wednesday for the 11th time in 17 months amid inflation concerns.
However, it didn’t say anything about when or when it may raise rates again. The Fed’s benchmark short-term rate increased by nearly 0.1% to 5.3% on Wednesday, marking the highest level since 2001.
The Fed’s most recent move, on top of its other rate hikes, may result in additional price hikes for credit cards, mortgages, auto loans, and corporate borrowing.
Fed Chair Jerome Powell was evasive about any predictions for upcoming rate hikes when he spoke at a news conference.
Since March 2022, when it started raising rates, the Fed has frequently hinted at its impending move. The Fed’s officials may or may not raise rates once more in September, according to Powell this time.
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Fed’s Uncertain Stance on Raising Rates
Regarding whether the Fed should eventually raise rates higher or simply maintain them at their current level for an extended length of time, Powell provided conflicting signals.
The point, according to Diane Swonk, chief economist of the global accounting powerhouse KPMG, was that it was about as plain as mud. They do not want to prematurely declare victory. They are aware that inflation occurs in spurts.
Powell recognized that despite the Fed’s swift rate increases, the economy has proven to be remarkably durable, with growth continuing and businesses continuing to create employment. He also disclosed that the staff economists at the Fed no longer expect a recession.
The central bank’s staff economists predicted a little recession for later this year, according to the minutes from its March meeting, which were published in April.
And he added that he continues to believe that a gentle landing, in which inflation returns to the Fed’s target of 2% without triggering a severe recession, is still conceivable.
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Source: apnews.com