Though inflation has reached its slowest pace in two years, Wednesday's hike reflects the concern of Fed officials that the economy is still growing too fast for inflation to fall back to their 2% target. "My base case is that we will be able to achieve inflation moving back down to our target without the kind of really significant downturn that results in high levels of job losses," the Fed chair said. In April, the minutes of the central bank's March meeting had said that staff economists envisioned a "mild" recession later this year.Īnd he said he still thinks that a "soft landing" - in which inflation would fall back to the Fed's 2% target, without causing a deep recession - is still possible. He also revealed that the Fed's staff economists no longer foresee a recession. Still, Powell acknowledged that the economy has proved surprisingly resilient despite the Fed's rapid rate hikes, with growth continuing and companies still adding jobs. They know inflation moves in fits and starts." "They don't want to declare victory too soon. "It was about as clear as mud, and I think that was the point," said Diane Swonk, chief economist at accounting giant KPMG. Powell sent a mixed message about whether he thinks the Fed will eventually need to further raise rates or instead just keep the current level of rates in place for a prolonged period. "And I would also say it's possible that we would choose to hold steady at that meeting." "It is certainly possible that we will raise rates again at the September meeting," he said. This time, though, Powell said the Fed's policymakers may or may not raise rates again at their next meeting in September. Since it began raising rates in March 2022, the Fed has often telegraphed its upcoming action. Speaking at a news conference, Fed Chair Jerome Powell was noncommittal about any expectations for future rate hikes. Coming on top of its previous hikes, the Fed's latest action could lead to further increases in the costs of mortgages,auto loans, credit cards and business borrowing. Wednesday's move raised the Fed's benchmark short-term rate from roughly 5.1% to 5.3% - its highest level since 2001. But it provided little guidance about when - or whether - it might hike rates again. WASHINGTON - The Federal Reserve raised its key interest rate Wednesday for the 11th time in 17 months as part of its ongoing drive to curb inflation.
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