The US Federal Reserve voted on Wednesday to halt its aggressive campaign to raise interest rates.
Washington:
The US Federal Reserve voted on Wednesday to halt its aggressive campaign to raise interest rates despite “high” inflation, while indicating that another sharp increase may be needed before the end of the year.
The Fed’s rate-setting committee voted to hold its benchmark lending rate between 5.0 percent and 5.25 percent, the central bank said in a statement, after 10 consecutive hikes through March 2022.
Despite the Fed’s aggressive campaign of monetary tightening, annual inflation has remained consistently above its long-term target of 2 percent, while unemployment is near a record low.
The Fed said that keeping interest rates steady gives policymakers time before the Federal Open Market Committee (FOMC) meets to “assess additional information and the effects of monetary policy”.
The move was broadly in line with analysts’ expectations.
However, members of the FOMC indicated that further monetary tightening was to come. He raised the average projection for the Fed’s benchmark lending rate later this year by half a percentage-point.
The US economy has shown signs of a recession, with the Fed recently predicting the start of a mild recession later this year.
But the central bank said on Wednesday that recent indicators suggest “economic activity continues to expand at a modest pace.”
The Fed also issued an updated economic forecast, raising its 2023 GDP growth projections from 0.4 percent to 1.0 percent in March.
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