Fed Pauses Interest Rates Due To Inflation Losing Steam, But More Hikes Coming

Key Points:

• The Fed has paused interest rates due to inflation numbers losing steam.
• Almost all participants believe further rate changes will be necessary.
• The Fed will carefully monitor the economy and make informed decisions based on data and analysis.

The Fed pauses interest rates, citing inflation numbers losing steam, as per Watcher Guru. FED Chair Jerome Powell emphasizes commitment to return inflation to the 2% objective, and interest rate hikes are likely to continue.

The Federal Reserve’s decision to pause interest rates for the first time in almost a year has been met with much speculation and discussion. Fed Chairman Jerome Powell has addressed the media to discuss the decision and its implications, breaking down the FOMC Meeting of June 2023 and its key talking points.

Powell discussed the process of pausing interest rates and how this recent action does not determine the course the Federal Reserve will take in future meetings. He emphasized the Fed’s commitment to returning inflation to their 2% objective, noting that nearly all participants think further rate changes will be necessary.

The decision to pause was seemingly derived from inflation data released earlier this year. Specifically, the data showed that inflation numbers have been losing steam, giving the Fed a window to pause its interest rate hikes. Powell noted that the Fed believes more interest rate hikes are to come, with almost a guarantee of consistent interest rate hikes in the coming meetings.

One of the major points of contention from the media in attendance is why the Fed paused at all if interest rate hikes are likely to occur in the future. In response, Powell stated the necessity to observe the uncertain lags with which monetary policy affects the economy and potential headwinds from credit tightening. Powell noted that observing data in response to the hikes will be vital, and they will factor into their interest rate decision.

Additionally, Powell emphasized the observation of macroeconomic implications, regarding what action they take at the July meeting. The Fed will carefully monitor the situation, especially in terms of some of the largest financial closures since the financial crisis of 2008. These closures will undoubtedly impact the current economic situation of the country.

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