Fed Announces Rate Hike Pause, But Says to Expect More Hikes Later This Year (VIDEO)

Updated 15.6.2023 20:23

Following Ten Consecutive Interest Rate Hikes, the U.S. Federal Reserve Announced Today That There Won’t Be an 11th

The Federal Open Market Committee has decided to hold off on increasing interest rates this month but told the market to expect another two hikes later this year.

After Federal Open Market Committee’s two-day meeting, it was announced that the Federal Reserve is pausing its rate hike campaign, leaving rates unchanged for the month of June 2023. The Fed indicated the June pause would allow the committee to analyze the effects the previous ten consecutive rate hikes had on inflation.

The goal of the Fed’s rate hike strategy is to bring inflation down to 2%. Inflation is currently sitting at 5.3%, down from its June 2022 high of 9.1%.

The Fed funds rate remains at a target range of 5%-5.25%.

Source: CNBC Television YouTube

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The Federal Open Market Committee explained the rationale behind its decision in a post-meeting statement, which stated:

“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy.”

At the press conference following the announcement, Federal Reserve Chairman Jerome Powell commented on the central bank’s decision, saying:

“We have raised our policy interest rate by five percentage points, and we’ve continued to reduce our security holdings at a brisk pace. We’ve covered a lot of ground, and the full effects of our tightening have yet to be felt.”

When asked by a reporter at what point could rate cuts be expected, Powell responded:

“It will be appropriate to cut rates at such time as inflation is coming down really significantly. And again, we’re talking about a couple of years out. As anyone can see, not a single person on the committee wrote down a rate cut this year, nor do I think it is at all likely to be appropriate.”

Source: CNBC Television YouTube

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