HOTMaura Higgins Love Island Journey: From UK Stardom to USA Ambassador Role READ NOW
HOTLove Again Movie With Photos READ NOW
HOTSaltbox Updates READ NOW
HOTChicken Farm for Sale in Arkansas READ NOW
HOTHelen Flanagan School Shoes Controversy: A Deep Dive into the Debate READ NOW
HOTCarlos Santana Swings into Twins Territory READ NOW
HOTWikiLeaks Founder Julian Assange Fights Extradition in UK Court READ NOW
HOTTax Deadline 2024 Approaching: Here are Key Things You Need to Know READ NOW
HOTGet ‘Dungeon of the Endless Free on Steam’ Now! READ NOW
HOTChloe Brockett Gets Her Booty Ready For The Big Brother House READ NOW
parafiks menu
Sam Bennett

Sam Bennett

14 Jun 2023


31 Read.

Federal Reserve to Pause Rate Hike, But Signals Future Increases

The Federal Reserve is set to hold interest rates steady in its upcoming meeting, breaking its streak of consecutive rate hikes.

The pause is aimed at allowing the Fed to evaluate the effects of its recent aggressive approach to controlling inflation.

Top officials at the Federal Reserve are concerned about the impact of reduced bank lending on the economy.

As interest rates have risen, banks have slowed their lending activities, leading to decreased demand for loans.

The collapse of three large banks last year has further raised concerns about a potential tightening of loan qualifications and its impact on lending. However, economists believe the damage will be minimal.

The Federal Reserve’s policymaking committee is divide on the appropriate course of action. Some members favor one or two more rate hikes.

While others advocate for maintaining the current rate for a few months to observe the moderation of inflation.

The latter group is cautious about the risk of pushing the economy into a deep recession through aggressive rate hikes.

The latest government report on inflation provides ammunition for both sides of the rate hike debate.

Overall price increases slowed, but core prices, excluding food and energy costs, remained high at 5.3% year over year.

The Fed’s target for inflation is 2%, and the gradual decline in overall inflation indicates that previous rate hikes have had some impact.

You may also like: Inflation Reasons and Why Do People Talk About It?

Potential Scenarios for Future Rate Adjustments For Federal Reserve

Federal Reserve

If measures of core inflation decline, the Fed might keep its key rate unchanged for the rest of the year. Alternatively, policymakers may decide on one final rate hike in July, bringing the key rate to around 5.4%.

Economists suggest this could be the end of the current rate hike cycle. However, if inflation remains persistently high, the Fed may continue raising rates.

The economy has outperformed expectations, with strong hiring and robust consumer spending.

The Fed’s updated forecasts are likely to reflect modest economic growth projections, with a forecasted expansion of 1% this year.

Unemployment rate estimates may be revise downward to 4.1% by year’s end. While inflation estimates could be raise to 3.8% for year-over-year core inflation.

The Federal Reserve is expect to pause its rate hike campaign in the upcoming meeting, providing time to assess the impact of previous increases on inflation and bank lending.

While there is a division within the Fed regarding future rate hikes. The central bank may signal more increases in the coming months.

The economic outlook remains positive, with strong hiring and consumer spending contributing to modest growth.

The Fed’s decision will be closely watch as it seeks to strike a balance between taming inflation and supporting economic expansion.

Federal Reserve to Pause Rate Hike, But Signals Future Increases