The US central bank held its benchmark rate at a 22-year high but its hawkish outlook set off market jitters as investors braced for the impact of higher-for-longer interest rates
The Federal Open Market Committee (FOMC) voted unanimously to hold the federal funds rate between 5.25 percent and 5.5 percent. This is the second pause in three months after it raised rates by 525 points since March 2022. To be clear, this isn’t a policy reset. It reiterated, one, the need for price stability and, two, the fair possibility of a soft landing.
"The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer. Nonetheless, we’re committed to getting inflation back down to 2 percent—because we think that a failure to restore price stability would mean far greater pain later," US Federal Reserve Chairman Jerome Powell said.