The Federal Reserve raised interest rates by a quarter of a percentage point and signaled it may pause further increases, giving officials time to assess the fallout from recent bank failures and monitor the course of inflation
The move marked a new stage of the U.S. central bank's management of the recovery from the COVID-19 pandemic, with what may be its final rate hike of the current tightening cycle and heightened attention to risks facing the economy. The Fed has now raised rates ten consecutive times since March 2022, pushing its benchmark overnight interest rate to the 5.00%-5.25% range.
The new language does not guarantee the Fed will hold rates steady at its next policy meeting in June, and the statement noted that "inflation remains elevated," and job gains are still "running at a robust pace." "Policy is tight" and that makes it possible that the central bank has done enough with rates, Powell said.
Risks around the recent failures of several U.S. banks and a debt limit standoff between Republicans in Congress and Democratic President Joe Biden have added to the Fed's sense of caution about trying to tighten financial conditions further.
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