The U.S. Federal Reserve raised its key interest rate by a quarter of a percentage point on Wednesday and signaled it may delay further hikes, giving officials time to assess the fallout from recent regional bank failures as they wait for the impasse to end. political issues related to the increase in the US debt ceiling and monitors the evolution of inflation, Reuters reports.

During a news conference on Wednesday, President Jerome Powell said that “no decision has been made on a pause today,” but he said the change in the language of the statement about future policy tightening was “significant,” the News quoted him as saying. ro

The Fed’s unanimous decision raised the benchmark overnight US central bank interest rate to a range of 5.00%-5.25%, marking the Fed’s tenth consecutive rate hike since March 2022.

But the central bank’s policy statement said the Federal Open Market “still anticipates that some additional policy tightening may be appropriate to achieve a monetary policy stance that is sufficiently accommodative to return inflation to 2% over time.”

In place of that wording, the Federal Reserve inserted a more qualified statement reminiscent of the language it used when it suspended interest rate hikes in 2006, saying that “in order to determine the extent to which further policy tightening may be appropriate,” officials will examine how the economy, inflation and financial markets behave in the coming weeks and months.

The new wording does not guarantee that the Fed will keep interest rates steady at its next policy meeting in June, and the statement noted that “inflation remains high” and job gains are still at a “steady pace.”

But the Fed’s key rate is now about the same as it was on the eve of the destabilizing financial crisis 16 years ago, and at a level that most Fed officials estimated in March would actually be “tight enough” to return to over time. at an inflation rate of 2%. Now inflation is twice as high.

Economic growth remains moderate, but “recent developments could lead to tighter lending conditions for households and businesses and affect economic activity, employment and inflation,” the Fed said.

Risks related to the recent bankruptcies of several US banks and the political impasse over the debt ceiling between Republicans in Congress and Democratic President Joe Biden have increased the Fed’s caution about trying to further tighten financial conditions. (News.ro)