Washington:
The US Federal Reserve voted on Wednesday to suspend its aggressive campaign of rate hikes despite “increased” inflation, while signaling that another sharp hike could be needed before the end of the year.
After 10 consecutive hikes since March 2022, the Fed’s rate-setting committee voted to keep the benchmark rate between 5.0 percent and 5.25 percent, the central bank said in a statement.
Despite the Fed’s aggressive monetary tightening campaign, annual inflation remains stubbornly above its long-term target of 2 percent, while unemployment is close to a record low.
Keeping interest rates stable gives Federal Open Market Committee (FOMC) policymakers time “to assess additional information and its implications for monetary policy,” the Fed said.
The move was largely in line with analyst expectations.
However, FOMC members hinted that more monetary tightening is on the horizon. They raised the median projection for the Fed’s interest rate benchmark at the end of this year by another half a percentage point.
The US economy is showing signs of slowing, with the Fed recently predicting a mild recession to begin later this year.
But the central bank said on Wednesday that recent indicators suggest “economic activity has continued to grow at a modest pace.”
The Fed also released an updated economic forecast, raising GDP growth forecasts for 2023 from 0.4 percent in March to 1.0 percent.
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