The Federal Reserve Board yesterday raised its benchmark interest rate once again, this time sending it to its highest level in 22 years.
And Jerome Powell, chairman of the Federal Reserve, said that staffers at the central bank no longer expect a recession to hit the United States later this year, thanks to the board’s interest-rate hikes.
The Federal Reserve raised its key interest rate by 0.25% yesterday, increasing this benchmark rate to a target range of 5.25% to 5.5%. The board has been increasing this rate steadily for more than a year to fight persistent inflation.
NBC reported that consumer prices have fallen for 12 consecutive months. That’s good news. But even with these declines, consumer prices in June were still 3% higher than they were during the same month a year earlier. The Fed’s goal has been to use interest-rate hikes to push inflation down to what it considers a healthier 2%.
Yesterday’s move marked the Fed’s 11th interest-rate hike in the last 17 months.
The big question is whether this will be the Fed’s last rate hike this year. Powell, while announcing the latest rate hike, wouldn’t commit to that, saying that the central bank will make decisions on a meeting-by-meeting basis. CNBC, though, reported that financial markets pricing indicates a better than 50% chance that the Fed won’t push through any more hikes this year.
“I would say it’s certainly possible that we will raise funds again at the September meeting if the data warranted,” said Powell, during a news conference yesterday. “And I would also say it’s possible that we would choose to hold steady and we’re going to be making careful assessments, as I said, meeting by meeting.”
