The U.S. Federal Reserve kept its key interest rate unchanged Wednesday after having raised it 10 straight times to combat high inflation.
The Fed’s move to leave its benchmark rate at about 5.1 per cent, its highest level in 16 years, suggests that it believes the much higher borrowing rates it’s engineered have made some progress in taming inflation. But top Fed officials want to take time to more fully assess how their rate hikes have affected inflation and the economy.
The economic projections revealed a more hawkish Fed than many analysts had expected. Twelve of the 18 policymakers forecast at least two more quarter-point increases in the Fed's rate. Four supported a quarter-point increase. Only two officials envisioned keeping rates unchanged. Powell and other top policymakers have also indicated that they want to assess how much a pullback in bank lending might be weakening the economy. Banks have been slowing their lending — and demand for loans has fallen — as interest rates have risen. Some analysts have expressed concern that the collapse of three large banks last spring could cause nervous lenders to sharply tighten their loan qualifications.
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