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With signs of a recession looming, the Federal Reserve Wednesday approved what some expect will be the final interest rate increase in the Fed’s year-long inflation-fighting campaign.
Having raised the federal funds rate 10 times since March 17, 2022, the Federal Open Market Committee has now brought its target for the benchmark rate to between 5.0 to 5.25 percent — a level last seen just before the Great Recession of 2007-09.
Although bond market investors are betting the Fed will reverse course and begin lowering rates later this year if a recession does materialize, Federal Reserve Chairman Jerome Powell would only acknowledge that the Fed could be done hiking rates for now.
While there are many uncertainties that lie ahead — including the impacts of recent bank failures, and a potential impasse over raising the U.S. debt ceiling — future increases will depend on data, Powell said.
“The assessment of the extent to which additional policy firming may be appropriate is going to be an ongoing one, meeting by meeting,” Powell told reporters.
In a statement, members of the policy-setting Federal Open Market Committee said they will keep an eye on “labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
Powell said the recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank “does complicate” attempts to gauge the cumulative impacts of tightening so far, which can take some time to affect economic…