The Federal Reserve yesterday maintained the target range for the federal funds rate at 5.25% to 5.5%.
In a statement, the Fed said it “seeks to achieve maximum employment and inflation at the rate of 2% over the longer run.”
It added:
“In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the committee will continue reducing its holdings of treasury securities and agency debt, and agency mortgage-backed securities, as described in its previously announced plans. The committee is strongly committed to returning inflation to its 2% objective.
According to reporting by The Wall Street Journal, recent economic activity has been stronger than anticipated, and officials expect interest rates to be kept near their current level through 2024, based on projections released Wednesday at the conclusion of the Fed’s two-day policy meeting.
Chairman Jerome Powell said officials don’t need to decide yet if they will raise rates again this year. Inflation has declined, but he was quoted as saying, “we want to see that it’s more than just three months.”
Fed officials raised the benchmark federal-funds rate at their meeting in July to between 5.25% and 5.5%. They started raising rates from near zero in March 2022.
The most recent decision regarding rates marks the second meeting this year that the Fed opted against raising rates. Because it can take a year or longer for rate increases to slow economic activity, officials have said a slower pace for hikes would allow more time to see how the economy is responding to the increases.
WSJ said that economic projections show that 12 of the 19 Fed officials expect to raise rates one more time in 2023. They meet again at the end of October and December.
