The US Federal Reserve last night signalled it has not yet finished raising interest rates – and that they would stay higher for longer – even as it left them on hold for the time being.
America’s central bank is trying to steer the world’s biggest economy to a so-called ‘soft landing’, where inflation is brought under control without triggering a recession.
But projections published by the Fed alongside its decision showed it still expects one more hike this year and that it foresees rates coming down more slowly next year than it did previously.
Cautious: US Federal Reserve chairman Jerome Powell (pictured) said the process of getting inflation down to its 2% target still had a ‘long way to go’
Fed chairman Jerome Powell said the process of getting inflation down to its 2 per cent target still had a ‘long way to go’ adding: ‘We want to see convincing evidence that we have reached the appropriate level.’
The decision to leave rates on hold was widely expected and comes after recent figures showed signs of a cooling jobs market in the world’s biggest economy – with unemployment on the rise.
However, the Fed has now revised up its expectations for GDP growth amid ‘robust’ consumer spending.
Ian Shepherdson at Pantheon Macroeconomics described the rates decision as a ‘hawkish hold’ but suggested inflation and unemployment figures might not turn out as the Fed expects.
‘Policy makers are determined not to declare victory until they are sure inflation is vanquished,’ he said.
