The Federal Reserve raised its benchmark short-term interest rate 25 basis points to 5.25% to 5.50% on Wednesday, July 26. The central bank said that further interest rates are likely, but that the timing of any rate increases was contingent on data showing how the economy is reacting to interest rate increases so far.
Fed Chair Jerome Powell made it clear that there is more work ahead to bring in inflation down to the Fed’s target of 2%. But he also made it clear that the timing of any future moves will depend on of data over the coming weeks and months.
“We think we need to stay on task,” Powell said at a news conference after the Fed’s rate hike announcement. “We think we’re going to need to hold policy at restricted levels for some time. And we need to be prepared to raise further, if we think that’s appropriate.”
Importantly, the Fed decision was unanimous, showing that Powell managed to keep the Fed’s inflation hawks and doves on the same policy path for another meeting.
The Fed has indicated plans to raise rates one more time this year. But Powell said that could happen at any of the upcoming meetings in September, November and December, and that officials have not settled on any schedule. cadence. Instead, they’ll scrutinize changes in the economy. By the time Fed officials meet again on interest rates on September 20, they’ll have two more jobs reports and two more inflation reports, plus additional data on wages.
“I would say it is certainly possible that we would raise [rates] again at the September meeting if the data warranted,” Powell said. “And I would also say it’s possible that we would choose to hold steady at that meeting.”
Hope that’s all clear.