The Federal Reserve held interest rates steady Wednesday, but officials signaled they are prepared to raise rates again this year to tame stubborn inflation.
The central bank maintained its benchmark interest rate in the range of 5%-5.25%, the first time since January 2022 the Fed made no change to interest rates following a policy meeting.
Fed officials did, however, raise their interest rate forecasts for this year, signaling rates could rise to as high as 5.6%, implying two additional rate hikes are likely this year. Three officials see rates rising closer to 6%.
“Inflation pressures continue to run high,” Federal Reserve Chair Jerome Powell said at a Wednesday press conference. Getting inflation down to the Fed’s target “has a long way to go.”
Next year, officials see interest rates falling by 100 basis points to around 4.6%, higher than the 4.3% forecast in March.
The pause announced Wednesday, Powell said, shouldn’t be called a “skip.” What it does do, he added, is give the economy more time to adapt to prior hikes while letting Fed officials see the “full consequences” of the banking turmoil that roiled the financial system in the spring.
“We are trying to get this right,” Powell said.