WASHINGTON—As expected, for the first time in 14 months the Federal Reserve’s Open Market Committee adjourned today without raising interest rates, although the Fed signaled it is leaning toward another increase when it meets in July if inflation numbers don’t continue to cool.
The decision follows 10 consecutive increases but signaled they are leaning toward raising them next month if the economy and inflation don’t cool more.
In a statement, the Fed said the decision to maintain the benchmark federal-funds rate in a range between 5% and 5.25%, a 16-year high, might be short-lived.
“Holding the target range steady at this meeting allows the committee to assess additional information,” the committee said in a statement. The Fed said the decision on rates was unanimous among FOMC members.
‘Banking System is Resilient’
“The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks,” the Fed said in a statement.
The Fed decision comes after Consumer Price Index data released earlier this week showed the pace of inflation had cooled.
As CUToday.info has been reporting, economists in credit unions had been predicting the Fed would not raise rates at its June meeting, but they are mixed on whether it will do so when it meets in July.
“The FOMC held rates steady in June but framed it as a temporary pause," said NAFCU Chief Economist and VP-Research Curt Long. "The median committee member projects two more rate hikes over the second half of the year. That is a win for the hawks. For the doves, they bought more time to see if inflation truly has hit an inflection point and will decline at a faster pace in the third quarter. NAFCU will remain engaged with credit unions as the FOMC navigates the remainder of the year.”