On Wednesday, the Federal Reserve announced a widely expected 25 basis point increase to the federal funds rate, bringing it to its highest level since August 2007. The accompanying statement from the Fed’s Federal Open Market Committee (FOMC) hinted at a possible pause on future rate hikes. While March’s FOMC meeting indicated that further increases may be necessary, this latest statement noted that incoming information and economic developments will be closely monitored in order to assess their implications for monetary policy.
According to CNBC, markets are expecting slower growth and potential recession later this year which could lead the Fed into cutting rates again; however labor market resilience is still present while manufacturing activity has contracted for six months but services sector expansion is being seen as well. In determining “the extent to which additional policy firming may be appropriate” in order return inflation back up over time , all of these factors will need consideration by FOMC members when making decisions about future monetary policies .
