The Federal Reserve left interest rates unchanged Wednesday, the first time in nearly two years that the central bank paused rates over the course of two consecutive meetings.
Since March 2022, the Fed has hiked the federal funds rate from near-zero percent to a range of 5.25 to 5.5 percent in an effort to curb rampant inflation. Price growth upeneded the economy in the wake of the pandemic and Russia’s invasion of Ukraine, which helped push volatile energy prices higher.
While some have interpreted the latest pause as a sign that the Fed is nearing the end of its rates hikes, inflation remains stubbornly above the central bank’s 2 percent target, and the labor market is hotter than officials would like.
Annual inflation fell to 3.7 percent in September from its 9 percent peak last June, even as even as consumer spending, economic growth and the job market remain strong.
The Fed’s rate-hiking campaign has not triggered the recession that seemed all but inevitable at this time last year.
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In public appearances over the last month, Fed Chair Jerome Powell and other officials did not rule out additional rate hikes or chart a path forward to cut rates.
Interest rates are higher than they’ve been at any point over the past two decades, ballooning borrowing costs for homebuyers and car owners, crunching balance-carrying credit card holders and making it harder for Americans to repay their debts.
“Regular people wondering how this week’s Fed meeting will impact them should expect no relief from high interest rates anytime soon, though we may not see them rise much further. Short-term rates, like those on credit cards, and long-term rates like those on auto loans and mortgages will continue to make it more expensive to borrow,” said Elizabeth Renter, data analyst at NerdWallet.
Powell will hold a press conference at 2:30 p.m. EDT.
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