The US central bank said that interest rates will remain unchanged, defying expectations for the first time in more than a year.
The Federal Reserve maintained its 5%–5.25% target range for its benchmark rate, stating that it needed more time to evaluate the effects of previous rate hikes.
Since March 2022, the bank has already increased rates ten times in an effort to contain inflation.
Most authorities, according to bank predictions, anticipate future rate increases.
a majority believe that by year’s end, the Fed’s benchmark rate will be over 5.5%.
Federal Reserve chairman Jerome Powell said the bank was still waiting for evidence that inflation was slowing “decisively” – though it has come down sharply from its peak last year, as the shock to food and energy prices from the war in Ukraine subsides.
“We’re just not seeing a lot of progress,” he said. “We’re going to have to keep at it.”
Consumer prices rose 4% in the 12 months to May, climbing just 0.1% from a month earlier, the Labor Department reported on Tuesday.
But that remains higher than the 2% rate the bank considers healthy. Prices for many items beyond food and energy continue to rise steadily.
The Fed has already lifted its benchmark rate to the highest levels since 2007 to try to rein in the increases.