The Federal Reserve announced its decision to pause on adjusting its benchmark interest rate on Wednesday, leaving rates at a 22-year high and also signaling one more hike could be levied before the end of the year.
The last Fed pause in June was followed by a 0.25% increase in July to its interbank overnight lending rate, which brought the rate window to 5.25%-5.5%, the highest since 2001. The monetary body has assessed 11 hikes since the rate hovered near zero in March 2022 in its fight to quell inflation, which has been mostly inching down since hitting 9.1% in June 2022.
The rate hikes aim to raise the cost of debt for businesses and consumers, which should, theoretically, reduce the amount of spending and overall economic activity, a shift in dynamics that typically brings inflation rates down. The Fed has a stated goal of achieving and maintaining a 2% annual inflation rate that supports its dual mandate of maintaining price stability and maximum employment.
"We're fairly close, we think, to where we need to get," Powell said. "A place where we're confident of a stance to bring inflation down to 2%."
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