The Federal Reserve last night left interest rates in the US unchanged for the first time since it kicked off an aggressive round of hikes last year.
The central bank held its benchmark rate at between 5 per cent and 5.25 per cent following ten successive hikes since March 2022.
But in a sign that rates have not yet peaked, officials suggested there would be two further increases before the end of the year.
While further rate rises are therefore likely in the coming months, the move reflected the fact that inflation in the US has fallen to 4 per cent.
Rate relief: The US Federal Reserve (pictured) held its benchmark interest rate at between 5% and 5.25% following ten successive hikes since March 2022
That is still double the 2 per cent target but marks significant progress after inflation peaked at 9.1 per cent in June last year.
By contrast, inflation in the UK is still running at 8.7 per cent having peaked at 11.1 per cent last year.
So while the Fed was last night able to leave interest rates unchanged, the Bank of England looks set to press ahead with further increases next week.
The Bank has already raised rates from 0.1 per cent to 4.5 per cent since December 2021 and is widely expected to hike them to 4.75 per cent next week.
It is feared rates could hit 6pc by the end of the year – driving up mortgage costs for millions of borrowers.
With investors betting on yet more rate rises in the UK, the pound rose to a 14-month high against the dollar close to $1.27.
Sterling also topped €1.17 against the single currency for the first time since August last year.
Official figures yesterday showed the UK economy grew by 0.2 per cent in April as it bounced back from March’s decline.
Against that backdrop, Chancellor Jeremy Hunt warned the Bank has ‘no alternative’ but to hike interest rates again in order to tame runaway inflation.
