Fed raises rates 10th in 14 months, says no rate cuts in the near future

The US central bank raised the benchmark rate by 25 basis points on Wednesday, marking its 10th straight hike since March 2022.

Importantly, however, the Federal Reserve has signaled it may pause rate hikes despite monitoring the course of the inflation battle. The Fed chairman also suggested it was too early to expect rate cuts in the near term as inflation remains high.

5% or more rate

of recent rate hikes This means US interest rates have crossed 5% for the first time since 2007. His current rate hike regime is also the most aggressive since the 1980s.

Federal Reserve Chairman Jerome Powell said the central bank was committed to lowering inflation to a 2% annual target from the current 5%. “Inflation will not fall so quickly.

fighting inflation

The Federal Open Market Committee said the latest rate hike could be the last before reassessing the state of inflation. “A tightening of credit conditions for households and businesses is likely to put pressure on economic activity, employment and inflation,” the rate-setting committee said.

“The Federal Reserve no longer warns that further rate hikes should clearly be expected, but this falls short of a strong commitment to ‘pause’ rate hikes. Fitch Chief Economist Brian Coulton said: CBS news.

Federal Reserve Board Aggressive moves to curb inflation are hitting the economy as a whole. Especially sectors such as housing. The Fed has fought accusations of tightening monetary policy too early. Federal Reserve Chairman Jerome Powell denied the allegations, instead saying high inflation would hurt the economy even more.

Powell said in November that the fight against inflation would be a long one. “But it will take time for the full effect of monetary restraint to materialize, especially with respect to inflation…Thinking or talking about pausing rate hikes is very premature in my view. We have a way.” He said.