BLUF: The Federal Reserve Open Market Committee (FOMC) decided to pause rate hikes at their June meeting, signaling that further hikes may occur later this year. However, with low annual CPI increases and persistent core inflation, the Fed’s fight against inflation is not yet won. The central bank’s future actions will depend on economic developments leading up to the July meeting. Despite projecting two more rate hikes in 2023, Chairman Jerome Powell emphasized that rate cuts are not likely in the near future. The Fed faces a dilemma between wanting to lower interest rates and combatting price inflation. The pause in rate hikes is justified by allowing the previous rate cuts to fully take effect, although the impact may be felt through another financial crisis or major economic crash rather than lower price inflation.
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