(PatrioticPost.com)- In its continuous fight against inflation, the Federal Reserve increased its target interest rate by a quarter of a percentage point on Wednesday, but it also reiterated its commitment to “ongoing rises” in borrowing costs. But the U.S. central bank’s decision-makers did not provide any new economic forecasts.
The Fed said the conflict between Russia and Ukraine was still perceived as contributing to the “elevated global uncertainty.”
The U.S. economy is still seeing “moderate growth” and “strong” job increases, according to the Fed, but policymakers are still “very sensitive to inflation concerns.”
Jerome Powell, the Fed Chair, said that it expects that further increases in the target range will be necessary to achieve a stance of monetary policy that is sufficiently restrictive to bring inflation back to 2% over time.
The U.S. central bank explicitly acknowledged the progress achieved in slowing the rate of price rises from the 40-year highs set last year when it noted, “Inflation has moderated considerably but remains excessive.”
A reference to the “pace” of future increases was dropped in favor of a reference to the “extent” of rate adjustments, although the statement did imply that any future rate increases would be made in quarter-percentage-point increments.
The move, signaled by American central bankers before this week’s two-day policy conference, was widely expected by markets and raised the benchmark overnight interest rate to a range between 4.50% and 4.75%.
The Fed resisted market expectations that it was prepared to signal the end of the current tightening cycle as a nod to the fact that inflation has been decreasing consistently for six months by retaining the promise of future rate rises. However, those, it said, would take into consideration how the economy had been affected by the policy changes up to that point. This phrasing connected additional rate hikes to the development of incoming economic data.
Without producing a severe recession or a significant increase in the unemployment rate from the current 3.5%, a level seldom seen in recent decades, the Fed intends to continue pushing inflation down to its 2% objective.
According to the Fed’s favored metric, inflation dropped to a 5% annual pace in December.