BREAKING: The Federal Reserve hiked interest rates Wednesday in what is expected to be the end of its campaign, launched hurriedly last year, to counter historic inflation by increasing borrowing costs.
Following a two-day meeting of its Federal Open Market Committee in Washington, D.C., the central bank announced that it would be raising rates by a quarter of a percentage point.
An overwhelming 97% of investors expected the quarter of a percentage point revision, according to futures contract prices for rates in the short-term market targeted by the notoriously predictable Fed.Recent reports show that inflation is meaningfully falling but the pause is a sign that the central bank still sees too-high inflation as larger threat to the economy than an economic slowdown. The decision follows more than a year of, at times very aggressive, rate hikes.
At the outset of the Fed's efforts to bring down inflation via rate hikes, many economists feared that it would slow down commerce too much, and tip the economy into recession. Yet the labor market has remained robust, though has shown some signs of slowing in recent months. There is a growing likelihood that the Fed will be able to pull off an elusive “soft landing,” a scenario in which the central bank is able to tamp down inflation to a healthy pace while avoiding a recession. Just a few months ago, the prospect of a soft landing seemed highly unlikely.
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