Federal Reserve Raises Rates, Leaves Door Open for Pause

Posted on 05/03/2023

The Federal Reserve announced it was raising its key federal funds rate to more than 5%, a 25 basis point rise. This will bring the benchmark federal-funds rate to a range between 5% and 5.25%. This is a 16-year high. The Fed is continuing its fight against persistent inflation in the U.S. This is the 10th-consecutive rate hike since March 2022. The Fed statement omitted previous language that signaled more hikes are likely.

While inflation remained elevated, higher borrowing costs for households and businesses “are likely to weigh on economic activity, hiring, and inflation,” the Federal Reserve said, adding that the extent of these effects “remains uncertain.”

Keywords: Federal Reserve System.

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