Despite evaluating the consequences of the previous 10 interest rate increases, the Fed decided against an 11th consecutive increase on Wednesday. But the Federal Open Market Committee’s decision to hold off on a hike at this two-day meeting came with a projection that another two-quarter percentage point move is on the way before the end of the year. “We have raised our policy interest rate by five percentage points, and we’ve continued to reduce our security holdings at a brisk pace. We’ve covered a lot of ground and the full effects of our tightening have yet to be felt,” said Fed Chair Jerome Powell at a news conference following the central bank’s decision. After news broke that more rate increases were possible, stocks were pressured. However, encouraging news regarding the fight against inflation briefly enabled the market to recover.
The central bankers said they will take another six weeks to see the impacts of policy moves as the Fed fights an inflation battle that lately has shown some promising if uneven signs. The decision left the Fed’s key borrowing rate in a target range of 5%-5.25%. “Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” the post-meeting statement said. The Fed next meets July 25-26.