WASHINGTON, May 3 - The Federal Reserve moved its management of the post-pandemic economic recovery into a new phase on Wednesday with what may be the last in a historic series of interest rate hikes and heightened attention to credit and other economic risks. The US central bank raised its benchmark overnight interest rate by a quarter of a percentage...
Federal Reserve Chairman Jerome Powell arrives to hold a news conference after the release of US Fed policy decision on interest rates, in Washington, May 3, 2023.WASHINGTON, May 3 - The Federal Reserve moved its management of the post-pandemic economic recovery into a new phase on Wednesday with what may be the last in a historic series of interest rate hikes and heightened attention to credit and other economic risks.
"We're closer, or maybe even there," Powell said of the end-point of rate increases that have boosted the Fed's policy rate by a full 5 percentage points in the 10 meetings since March 2022, a torrid pace for the central bank and one that may now warrant allowing some time for the impact to be felt in full.
At a press conference following the release of the statement, Powell said inflation remains the chief concern, and that it is therefore too soon to say with certainty that the rate-hike cycle is over. "We on the committee have a view that inflation is going to come down not so quickly, it will take some time," he told reporters, and "in that world, if that forecast is broadly right, it would not be appropriate to cut rates" this year.
Yet job gains "have been robust," the Fed said, and Powell noted that some recent data on falling job openings and lower earnings growth, coupled with historically low unemployment, supported the idea that the economy could slow without a dramatic rise in joblessness. The shift in the Fed's approach was reflected in US interest rate futures, which showed broad expectations for no hikes at either of the central bank's next two policy meetings.
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