Federal Reserve Raises Interest Rates Another Quarter Point
(RTTNews) - After pausing its recent series of interest rate hikes last month, the Federal Reserve on Wednesday announced its widely expected decision to resume raising rates.
The Fed said that it has decided to raise the target range for the federal funds rate by 25 basis points to 5.25 to 5.50 percent. With the increase, the midpoint of the target range is the highest since early 2001.
The decision to increase rates came as the Fed noted inflation remains elevated, while U.S. economic activity has been expanding at a moderate pace and job gains have been robust in recent months.
With regard to the outlook for rates, the Fed said future decisions will take into account the "cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
The central bank said it remains highly attentive to inflation risks and reiterated it is strongly committed to returning inflation to its 2 percent objective.
The Fed's statement also acknowledged tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation but noted the extent of these effects remains uncertain.
The next monetary policy meeting is scheduled for September 19-20, with CME Group's FedWatch Tool currently indicating a 79.1 percent chance the Fed will leave rates unchanged.
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