The Federal Reserve raised interest rates by a quarter percentage point on Wednesday, bringing it to the 5.25% to 5.50% range, and reaching the highest level in 22 years. This is the 11th increase since March 2022 when the Fed began hiking up rates as a means to tame inflation.
The rate of inflation showed signs of cooling in June and now sits at a rate of 3% year-over-year, but the Fed is still aiming for that number to be closer to 2%.
“We’ve covered a lot of ground and the full effects of our tightening have yet to be felt,” Fed Chair Jerome Powell said at a news conference Wednesday.
Federal Reserve Chair Jerome Powell speaks to press during a news conference on July 26th. Alex Wong | Getty Images
If inflation cools further, there may be questions about the need for another rate increase later in the year. In June, the Fed held rates steady but scheduled two more hikes in 2023 — which means there still could be another increase on the horizon.
“It is certainly possible that we would raise funds again at the September meeting if the data warranted,” Powell said at the press conference. “And I would also say it’s possible that we would choose to hold steady at that meeting. We’re going to be making careful assessments, as I said, meeting by meeting.”