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Federal Reserve policymakers voted Wednesday to keep short-term interest rates where they’ve been since July, but signaled that they expect to implement one more rate hike before the end of the year and keep rates higher for longer in 2024.
The Federal Open Market Committee voted unanimously to keep its target for the short-term federal funds rate at 5.25 to 5.5 percent, as expected. But the latest “dot plot” mapping individual committee member’s future expectations showed most think the Fed will need to bump rates up one more time in order to get inflation under control.
Briefing reporters after the vote, Federal Reserve Chair Jerome Powell prefaced his comments about the potential for further rate hikes as he often does, by emphasizing that decisions will depend on “incoming data and their implications for the outlook for economic activity and inflation.”
“Given how far we have come, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” Powell said of recent economic cooling. “But we are mindful of the inherent uncertainties in precisely gauging the stance of policy. We’re prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective” of 2 percent.
Hiking rates to fight inflation
The Fed’s last rate hike in July brought the short-term federal funds rate to the highest level since 2001. But while the Fed was hiking rates by as much as 75-basis points at…