Fed Pauses Interest Rate Hikes

The Federal Reserve has decided not to increase interest rates for the 11th consecutive time, allowing for an assessment of the impacts of the previous 10 hikes. However, the central bank projects two more quarter-point rate increases by the end of the year. This decision, termed a "hawkish pause," is aimed at monitoring the effects of policy moves as the Fed battles inflation. While some market pressure initially arose, positive discussions on the inflation fight helped stocks rebound briefly. The individual expectations of Fed members, as shown in the "dot plot," indicate a higher funds rate by the end of 2023. The Fed's next meeting is scheduled for July 25-26. Opinions among FOMC members vary on future rate hikes, but economic growth forecasts for 2023 have improved, and inflation projections have been adjusted. The Fed believes that rate changes take time to impact the economy.