BREAKING: Fed pauses interest rate hikes after a year of increases.
Following a two-day meeting of its monetary policy committee in Washington, D.C., the central bank announced that it would not be increasing its interest rate target — but officials indicated the pause will be a temporary one. The vast majority of economists and investors anticipated such a pause in rate hikes, which comes as inflation keeps slowing.The central bank’s key overnight rate target will remain at 5% to 5.25%.
The pause is a signal that the central bank is beginning to see an economic slowdown and threats to the economy as potentially larger threats to the economy than too-high inflation. It also indicates that the Fed is growing more confident in signs that inflation is meaningfully slowing, which has been the goal of the barrage of rate revisions over the past year or so.
The committee members additionally revised up their GDP predictions for this year from 0.4% to 1% growth, indicating growing confidence that the economy could avoid some of the worst effects of the rate revisions. Additionally, inflation fell to a 1.1% annual rate in May, as measured by the producer price index, which gauges the wholesale prices of goods, which are eventually passed down to consumers.
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