The Federal Reserve left interest rates unchanged but signaled that borrowing costs may still need to rise by as much as half of a percentage point by the end of this year, as the central bank reacted to a stronger-than-expected economy
Policymakers see two more 25-basis-point hikes this yearWASHINGTON, June 14 - The Federal Reserve left interest rates unchanged on Wednesday but signaled in new projections that borrowing costs may still need to rise by as much as half of a percentage point by the end of this year, as the U.S. central bank reacted to a stronger-than-expected economy and a slower decline in inflation.
After a year in which many economists and analysts argued recession was imminent and the economy about to crack, under the Fed's latest quarterly projections "growth estimates moved up a bit, unemployment estimates moved down a bit, inflation estimates moved up," Powell said. "The conditions we need to see ... to get inflation down are coming into place," Powell told reporters, including below-trend growth, a somewhat weaker labor market, and improving supply chains. "But the process of that actually working on inflation is going to take some time."
U.S. Federal Reserve Chairman Jerome Powell arrives to hold a news conference after the release of the Fed policy decision to keep interest rates unchanged, at the Federal Reserve, June 14, 2023. REUTERS/Kevin LamarqueThough Powell repeated the Fed's standard warning about "upside" risks to inflation, the decision to hold steady at this time was also an effort to try to ease the pace of price increases "with the minimum damage" to the job market.
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