US Federal Reserve pauses interest rate hikes after 10 increases in a row
- Inflation remains ‘elevated’, however, and the central bank signalled that more monetary tightening can be expected before year end
- Meanwhile, holding its benchmark lending rate between 5.0 per cent and 5.25 per cent gives policymakers time to ‘assess additional information’
The US Federal Reserve voted Wednesday to pause its aggressive campaign of interest rate hikes despite “elevated” inflation, while indicating a sharp increase could be needed before the end of the year.
After 10 straight increases, the Fed’s rate-setting committee voted to hold its benchmark lending rate between 5.0 per cent and 5.25 per cent, the central bank said in a statement.
Holding interest rates steady gives policymakers on the Federal Open Market Committee (FOMC) time “to assess additional information and its implications for monetary policy”, the Fed said.
The move was broadly in line with analysts’ expectations.
But FOMC members also hinted that more monetary tightening lies ahead, raising the median projection for interest rates at the end of this year by another half percentage-point.
This suggests the Fed may need to hike rates twice more before the year is out.
The US economy has shown signs of slowing, with the Fed recently forecasting a mild recession to begin later this year.