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, but it provided little guidance about when — or whether — it might hike rates again, the Associated Press reports.
Wednesday’s move raised the Fed’s benchmark short-term rate from roughly 5.1% to 5.3% — its highest level since 2001. 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.
Speaking at a news conference, Fed Chair Jerome Powell was noncommittal about any expectations for future rate hikes. Since it began raising rates in March 2022, the Fed has often telegraphed its upcoming action. This time, though, Powell said the Fed’s policymakers may or may not raise rates again at their next meeting in September.
He also 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.
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. With consumer confidence hitting its highest level in two years, Americans keep spending — crowding airplanes, traveling overseas, and flocking to concerts and movie theaters. Most crucially, businesses keep hiring.
When Fed officials last met in June, they signaled that they expected to raise rates twice more. By the time they meet again Sept. 19-20, they will have much more data in hand — two more inflation reports, two reports on hiring and unemployment, and updated figures on consumer spending and wages.
