Valentine Okafor
The US Federal Reserve has announced a benchmark interest rate hike by another 25 basis points.
The last time the Central Bank hiked rate was in March, even after the failure of Silicon Valley Bank. Then, the Fed said it anticipated that future interest rate hikes would be needed. This time around, the Government changed the language in its monetary policy statement to say only that it would factor in the lagged effects that its policies have in determining whether or not to hike rates again.
“Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation,” the Fed wrote. “The extent of these effects remains uncertain.”
In a press conference following the rate hike announcement, Federal Reserve Chair Jerome Powell suggested any discussion of further rate increases has not yet yielded a conclusion.
“Today our decision was to raise the federal funds rate by 25 basis points. A decision on a pause was not made today,” he said.
But he didn’t rule out further rate hikes.
“We are prepared to do more if greater monetary policy restraint is warranted,” Powell said. “Reducing inflation is likely to require a period of below trend growth and some softening of labor market conditions.”
The federal funds target rate now stands at around 5.25 per cent the highest it’s been since July 2007.