The US central bank has raised interest rates again as it continues its fight to stabilize prices in the world’s largest economy.<\/p>\n\n\n\n
The Federal Reserve said it was raising its key rate by 0.25 percentage points.<\/p>\n\n\n\n
That marks the smallest increase since last March, after a series of aggressive rate hikes last year.<\/p>\n\n\n\n
But officials warned that they did not think they were finished raising rates, despite signs that price increases in the US are slowing. <\/p>\n\n\n\n
The bank’s moves are closely watched around the world as the US drives a global shift after years of low-interest rates that followed the financial crisis.<\/p>\n\n\n\n
The Bank of England and European Central Bank are expected to announce their own rate increases on Thursday.<\/p>\n\n\n\n
The rate rise announced by the Fed on Wednesday was expected. It increases the bank’s benchmark rate to a range of 4.5%-4.75% – the highest since 2007.<\/p>\n\n\n\n
By pushing up borrowing costs, the Fed is trying to cool the economy and ease the pressures of pushing up prices.<\/p>\n\n\n\n
But officials risk triggering a painful recession, in which the economy slows so sharply that it prompts mass job cuts.<\/p>\n\n\n\n
Pressure has mounted on the bank to slow, or stop, its rate hike campaign, as the higher borrowing costs hurt sectors such as housing and the US economy, slows sharply. <\/p>\n\n\n\n
Those voices have grown louder amid recent data showing inflation in the US dropping to 6.5% last month.<\/p>\n\n\n\n
Many investors have been betting that the bank will raise rates only once more after this meeting.<\/p>\n\n\n\n
But Federal Reserve chairman Jerome Powell said bank officials remained worried by data suggesting that the costs of many services – such as health care – are increasing far faster than the 2% pace considered healthy.<\/p>\n\n\n\n
He said the bank would rather raise rates too high than declare victory over the problem prematurely. <\/p>\n\n\n\n
“The job is not fully done,” he said. “While recent developments are encouraging we will need substantially more evidence to be confident that inflation is on a sustained downward path.”<\/p>\n\n\n\n
In the statement announcing its decision, Fed officials said they continued to believe “ongoing” increases would be appropriate.<\/p>\n\n\n\n
Projections released in December showed they thought the bank’s benchmark rate could stand above 5% at the end of 2023.<\/p>\n\n\n\n
Mr Powell declined to say whether officials had changed their views, noting that there was a lot of “uncertainty” about the outlook. <\/p>\n\n\n\n
Stocks rose during and after the news conference, with the S&P 500 ending up more than 1%. <\/p>\n\n\n\n
The market gains could be a sign that investors are gaining confidence that the central bank will be able to stabilize prices without a recession, said Jay Bryson, an economist at Wells Fargo. <\/p>\n\n\n\n
But Ronald Temple, chief market strategist at Lazard, said if investors get too optimistic that the rate rises are over, it may make the Fed’s job harder. <\/p>\n\n\n\n
“Taken together with today’s report indicating near record level job openings, I believe markets remain too dovish regarding how high rates will go and how long they will stay there,” he said. <\/p>\n\n\n\n
“The more markets resist the Fed, the tighter conditions will have to be to tame inflation.”<\/p>\n","protected":false},"excerpt":{"rendered":"
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