Financial News: Fed Raises Interest Rates By Another Quarter Point,

Fed Raises Interest Rates By Another Quarter Point, Hints At Potential Pause

05/03/2023 - 14:26:00 (RTTNews)

(RTTNews) - In a widely anticipated move, the Federal Reserve on Wednesday announced its decision to raise interest rates by another quarter point.

The Fed decided to raise the target range for the federal funds rate by 25 basis points to 5 to 5.25 percent, making the tenth straight rate hike.

The unanimous decision to continue raising rates came as the Fed noted inflation remains elevated while also observing that job gains have been robust in recent months and the unemployment rate has remained low.

Notably, however, the Fed omitted a sentence included in the March statement that said the central bank "anticipates that some additional policy firming may be appropriate" to return inflation to 2 percent over time.

The Fed also tweaked language regarding the outlook for monetary policy, saying "the extent to which additional policy firming may be appropriate" rather than "the extent of future increases in the target range."

The central bank reiterated futures decisions would will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.

The Fed also once again said it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run.

The statement also described the U.S. banking system as "sound and resilient" but acknowledged tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.

The next monetary policy meeting is scheduled for June 13-14, with CME Group's FedWatch Tool currently indicating an 80.7 percent chance the Fed will leave rates unchanged.

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