US Fed announces rate hike of 25 basis points

But the statement suggests rate increases will continue, stressing that officials are 'highly attentive to inflation risks'

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By AFP

Published: Wed 1 Feb 2023, 11:05 PM

Last updated: Wed 1 Feb 2023, 11:21 PM

The Federal Reserve slowed its pace of interest rate hikes Wednesday, tempering its aggressive campaign to rein in costs as inflation cools, while signaling the battle is not yet over.

The US central bank announced a quarter-point hike to the benchmark lending rate at the end of its two-day policy meeting, taking the rate to a target range of 4.50-4.75 percent.

"Inflation has eased somewhat but remains elevated," said the Fed's policy-setting Federal Open Market Committee (FOMC) in a statement.

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It added that recent indicators "point to modest growth in spending and production" as economic activity eases.

But "the committee anticipates that ongoing increases in the target range will be appropriate" to bring inflation back to policymakers' two percent target over time, the statement said.

The Fed has cranked up interest rates eight times since March 2022, including four consecutive 0.75 percentage point increases, lifting borrowing costs in hopes of dampening demand.

The aim is to lower inflation, which surged to its fastest pace in decades last year but has since come off a peak.

The 0.25 percentage point rise marks a step down from December's half-point hike and bigger spikes last year.

But the FOMC statement suggests rate increases will continue, stressing that officials are "highly attentive to inflation risks" amid fallout from Russia's war against Ukraine.

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AFP

Published: Wed 1 Feb 2023, 11:05 PM

Last updated: Wed 1 Feb 2023, 11:21 PM

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