Federal Reserve pauses interest rate hikes

The Federal Reserve has decided not to institute another interest rate hike, at least for now. Its monetary committee decided that a pause in rate hikes is warranted because although inflation still is higher than it would like time is needed for the cumulative effects of past rate hikes to become evident.

The Federal Reserve said today that it still wants to bring inflation down to 2% over the long-term but for now will maintain the federal funds rate at 5-1/4% to 5-1/2%.

“Recent indicators suggest that economic activity has been expanding at a solid pace,” the Fed said. “Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated.”

The Fed said that it is confident that the U.S. banking system is sound and resilient.

“Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation,” the Fed said. “The extent of these effects remains uncertain. The committee remains highly attentive to inflation risks.”

The Fed said that it will be prepared to adjust monetary policy as appropriate if risks emerge that could impede the attainment of its goals.