Washington:
The US Federal Reserve voted on Wednesday to keep interest rates at a 22-year high, while forecasting an additional rate hike before the end of the year to curb inflation.
The Fed’s decision to keep its key interest rate between 5.25 and 5.50 percent gives policymakers time to “assess additional information and its implications for monetary policy,” the central bank said in a statement.
After 11 rate hikes since March last year, inflation has fallen sharply but remains stubbornly above the Fed’s long-term target of two percent per year – keeping pressure on officials to consider further policy action.
On Wednesday, the Fed said economic activity had grown “at a solid pace” amid strong job growth and a low unemployment rate.
A recent run of positive economic data has raised hopes that policymakers can slow price increases without triggering a damaging recession.
In addition to the interest rate decision, the rate-setting Federal Open Market Committee (FOMC) also updated its members’ forecasts for a range of economic indicators, as well as expectations for future monetary policy.
FOMC members left the average interest rate forecast between 5.50 percent and 5.75 percent and kept alive the possibility of another quarter-percentage-point rate hike before the end of the year.
They also raised expectations for interest rates next year by half a percentage point, indicating that the Fed expects interest rates will have to remain high for significantly longer to bring inflation down to desired levels.
FOMC members have also more than doubled the average economic growth forecast this year, from 1.0 in June to 2.1 percent, and have sharply raised their forecast for next year.
The forecast for the 2023 unemployment rate has been lowered slightly from June, suggesting the labor market is doing better than hoped, while expectations for headline inflation have risen slightly.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is published from a syndicated feed.)