Washington, June 14 (BNA): The Federal Reserve kept its key interest rate unchanged on Wednesday after raising it 10 consecutive times to combat high inflation.
But in a surprise move, the Fed has indicated that it may raise interest rates twice more this year, starting next month, according to the Associated Press.
The Fed’s move to leave its benchmark interest rate at around 5.1%, its highest level in 16 years, indicates that it believes the much higher borrowing rates it has engineered have made some progress in taming inflation.
But senior Fed officials would like to take the time to fully assess the rate at which higher interest rates are affecting inflation and the economy.
The central bank’s 18 policymakers envisage raising the key interest rate by an additional half point this year, to around 5.6%, according to the economic forecasts released on Wednesday.
The economic outlook revealed a more hawkish Fed than many analysts expected. Twelve of the 18 policymakers expected at least two more quarter-point increases.
Four upheld the quarter-point increase. Only two envisioned keeping the rates unchanged. Policymakers also predicted that their benchmark would remain higher for longer than it was three months ago.
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