The Federal Reserve raised the target range for its benchmark rate at 0,25% on Wednesday and left the door open for further rate hikes.
On this occasion, the monetary authority decided to expand the target range for its basic interest rate by 0,25%. This hike took the federal funds rate to a new range of 5,25% to 5,5%, the highest since March 2001.
The institution's stance leaves no room for doubt: the door remains open for future interest rate increases. According to Fed, these future increases will depend on the impact of previous increases on the economy and financial developments.
The US central bank is aware of its role as a reference in the world economy. In its statement, it highlighted that it will continue to evaluate additional information and its implications for monetary policy. It also reiterated that it still views inflation as "elevated" and noted that it remains "highly aware" of inflation risks, despite a softer inflation reading in June.
The Fed updated its assessment of the economy, characterizing growth as "moderate", an upgrade from the "modest" recorded at the last meeting. The central bank expects inflation to end the year close to 4%, up from 3,6% earlier, nearly double the Fed's inflation target.
In this article, we will discuss:
Fed with door open for more hikes?
The tone of the Fed's announcement and Powell's speeches are more expected today by analysts than a decision on interest rates.
“That's what we're going to look at and decide. It could be another September or keep at the current level. If we have signs that further tightening is needed, then we move on. Otherwise, we will keep it as it is,” Powell said.
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