WASHINGTON – The Federal Reserve held its key interest rate steady Wednesday but signaled another hike is likely this year amid still elevated inflation and a sturdy economy.
The central bank also forecast fewer rate cuts next year than previously expected as it keeps rates higher for longer to stamp out inflation.
The latest decision leaves the benchmark short-term rate at a 22-year high of 5.25% to 5.5%. It marks just the second meeting at which the Fed hasn’t raised its federal funds rate since it began its hiking campaign in March 2022.
How high will interest rates really go?
Fed policymakers estimate they’ll nudge up the federal funds rate by another quarter percentage point this year to a range of 5.5% to 5.75% in 2023, similar to their median forecast in June. Financial markets and many economists don’t buy it. They expect the Fed to stand pat the rest of the year because of signs the job market and inflation are cooling.
Protect your assets: Best high-yield savings accounts of 2023
What did Powell say today?
At a news conference, Fed Chair Jerome Powell stressed the Fed has made no decision about whether to lift rates again and is in no rush to do so.
“Given how far we’ve come, we are in a position to proceed carefully,” he said.
Powell said he’s pleased with how much inflation has come down but officials want to see a more sustained decline before concluding they can keep rates steady.
“We want to see convincing evidence that we’ve reached the appropriate level” of…
