The Federal Reserve on Wednesday held interest rates steady for the third straight time, bringing to an end a nearly two-year battle against inflation as consumer prices continue to cool.
The widely expected decision left interest rates unchanged at a range of 5.25% to 5.5%, the highest level in 22 years.
Policymakers have raised interest rates sharply over the past year, approving 11 rate increases in the hopes of crushing inflation and cooling the economy. In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.
FED’S FIGHT AGAINST INFLATION IS WEIGHING ON MIDDLE-CLASS AMERICANS
Hiking interest rates tends to create higher rates on consumer and business loans, which then slows the economy by forcing employers to cut back on spending. Higher rates have helped push the average rate on 30-year mortgages above 8% for the first time in decades. Borrowing costs for everything from home equity lines of credit, auto loans and credit cards have also spiked.
Yet the rapid rise in rates has not stopped consumers from spending or businesses from hiring.
Inflation has cooled from a peak of 9.1%, but it remains well above both the Fed’s 2% goal and the pre-pandemic average.
This is a developing story. Please check back for updates.
