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Federal reserve skips rate hike this time, but more are expected

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  • Staff Report 

The Federal Reserve chose to keep its key interest rate steady at 5.1%, a 16-year high, in its Wednesday meeting after a series of 10 consecutive rate increases aimed at mitigating inflation.


However, contrary to expectations, the Fed indicated potential for two more hikes later this year, possibly commencing as early as next month.

The Federal Open Market Committee said it needs to further evaluate how the previous rate hikes have impacted inflation and the economy, saying that keeping the rate unchanged allows time to “assess additional information and its implications” for policy.

The projections published on Wednesday revealed a more hawkish stance from the Fed than analysts had anticipated. Of the 18 central bank policymakers, 12 forecast at least two more quarter-point rate increases this year, potentially bringing the key rate to around 5.6%.

The policymakers also anticipate the benchmark rate to remain elevated for a longer period than predicted three months ago. This outlook is driven by the anticipation of a marginally healthier economy and more sustained inflation that might necessitate higher rates for cooling. In response to the announcement, stock prices fell while Treasury yields soared.



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