News Digest: Fed approves rate hike in 5.25 to 5.5% range
July 27, 2023
The US Federal Reserve approved yet another hike in interest rates that took the benchmark borrowing costs to their highest levels in more than 22 years. The move was completely priced in by the financial markets, which believes this would be the last for 2023, a report said.
The Federal Open Market Committee raised the rate by a quarter percentage point to a range of 5.25 to 5.5%, with the midpoint in the range being the highest that the rate has risen to since 2001. Chairman Jerome Powell said inflation had moderated since the middle of last year but hitting the target 2% is still a long way off.
Powell appeared to leave room to potentially hold rates steady at the Fed’s next meeting in September. Along with the rate hike the committee also indicated it will continue to cut the bond holdings on its balance sheet. This had peaked at $9 trillion before the Fed began tightening.