The Federal Reserve extended its fight against high inflation this week by raising its key interest rate by a quarter-point, its eighth hike since March, according to a report from the Associated Press. While inflation is easing, it remains high enough that the Fed is likely to pursue further rate hikes.
However, the Fed’s latest move will likely further raise the costs of many consumer and business loans and the risk of a recession.
In a statement, Fed officials repeated language they have used since last March that says, “ongoing increases in the (interest rate) target range will be appropriate.” That is seen as a signal that they intend to raise their benchmark rate again when they next meet in March and perhaps in May as well.
The Fed’s hike was announced one day after the government reported that pay and benefits for America’s workers grew more slowly in the final three months of 2022, the third straight slowdown. That report could help reassure the Fed that wage gains won’t fuel higher inflation.
