The quarter-point increase brings the Fed’s main lending interest rates to a range of 5.25 percent to 5.5 percent.
To combat above-target inflation, the US Federal Reserve raised its benchmark lending rate to the highest level since 2001 on Wednesday, signaling the likelihood of similar hikes in the future.
The quarter-point increase brings the Fed’s benchmark lending rate to a range of 5.25 percent to 5.5 percent, according to the US central bank, which added that it will “continue to assess additional information and its implications for monetary policy.”
The Federal Open Market Committee (FOMC) used similar language while voting to keep interest rates unchanged in June, and the current statement suggests that policymakers are considering another pause at their next meeting in September.
However, the Fed also stated that it would evaluate a variety of data sources “in determining the extent of additional policy firming,” implying that more monetary tightening is on the way.
This would be consistent with the last FOMC meeting’s median expectation of two further rate rises this year.
The quarter-point increase on Wednesday, which was also in line with experts’ estimates, is the Fed’s 11th since it launched an aggressive campaign in response to increasing prices last March.
After peaking last year, US inflation has slowed, but it remains above the Fed’s long-term target of 2%, implying that more policy action may be required.