While inflation is showing signs of cooling, the Federal Reserve believes it is not happening quickly enough.

Chair Jerome Powell presented a nuanced perspective on Wednesday regarding the Fed’s approach to the challenge of managing inflation, which is currently below its peak but still above the central bank’s target of 2%.

Powell indicated that the Fed plans to give it more time and potentially implement additional interest rate hikes to address the situation.

Despite this cautious stance, Powell expressed optimism that the necessary trends to further slow inflation are beginning to take shape.

These trends include lower rents and slower wage growth, which are expected to contribute to a decrease in inflationary pressures, the Associated Press reports.

In light of these factors, the Federal Reserve decided to maintain its benchmark interest rate at around 5.1% during its meeting on Wednesday.

This decision comes after a series of ten consecutive rate hikes over a span of 15 months, marking the quickest succession of increases in four decades.

By keeping rates unchanged, at least for now, Powell and other top officials at the Fed aim to assess the impact of higher borrowing costs on inflation and the overall economy.

Additionally, they want to monitor if the recent collapse of three major banks will have adverse effects on lending and economic growth.

In a surprising indication of a more hawkish stance, the Fed officials released projections suggesting the possibility of up to two additional quarter-point rate hikes by the end of the year.

Prior to the policy meeting, experts anticipated that the officials would signal only one more rate increase in the year.

Written by staff