Fed Chair Jerome Powell answering questions at the July 26 press briefing. Screenshot by Gabriel Frank for CPE
At the Federal Reserve Open Markets Committee’s meeting on Wednesday, the central bank announced its 11th rate hike since March 2022. The step raises the federal funds rate 25 basis points, to a range of between 5.25 percent and 5.5 percent.
The widely expected move follows last month’s pause on increases, during which the Federal Reserve took stock of the impact of its 10 consecutive increases. “It will take time for the full effects of our ongoing monetary restraint to be realized,” Fed chair Jerome Powell told reporters following the announcement.
Also of note, Powell said that the central bank is no longer forecasting a recession. The decision to raise rates is accompanied by favorable data for inflation, employment and wage growth, all of which point to a resilient economy. “The intermeeting data came in broadly in line with expectations,” he said.
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At the same time, these considerations were weighed with concerns surrounding the Fed’s goal of reducing core inflation to 2 percent. “We are seeing pieces of the puzzle coming together, but policy has not been restrictive enough for long enough to see the desired effects,” Powell added.
As such, Powell did not commit to either a pause or an increase at the FOMC’s September meeting, amid predictions of at least one more hike this year. He pointed to two additional job reports, along with two additional sets of CPI data before the next meeting as influencing the Fed’s next decision.
