The Federal Reserve says it will not raise interest rates this month.
Federal Reserve Chair Jerome Powell announced the decision Wednesday, making it the first time the Fed has decided to leave interest rates unchanged in 15 months.
In response to persistently high inflation levels, the increased interest rates a remarkable 10 consecutive times between March 2022 and May 2023.
Wednesday’s move keeps the key interest rate at about 5%.
Since early 2022, the Fed has increased the rate from 0.75%–1% to 5%–5.25%.
According to the committee, the reason behind the pause is that while inflation remains high, “recent indicators suggest that economic activity has continued to expand at a modest pace. Job gains have been robust in recent months, and the unemployment rate has remained low,” and Fed officials want to take more time to fully “assess additional information and its implications” on hiking rates even more.
However, Powell signaled that rates could still go higher this year.
“Looking ahead, nearly all committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to 2% over time,” said Powell in a press briefing shortly after the report was released. “Nearly all committee participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year.”
Inflation has fallen significantly from a peak last summer of more than 9% but remains at 4%, which is double the Federal Reserve’s target of 2%.
While this pause may be only temporary, experts say it will still allow banks to breathe a sigh of relief.