THE FED MAY NOT BE DONE HIKING INTEREST RATES

After lifting the federal funds rate at a rapid clip throughout most of 2022 and at a more moderate pace in the first half of 2023, the Federal Reserve put its series of rate hikes on pause at its June policy meeting. As inflation cools, the Fed is taking a step back to see how its policies are affecting the economy.

- LISA GERSTNER

To combat inflation, the Fed pushed up its benchmark rate over the course of 10 consecutive meetings before the one in June, with the rate rising from near 0% in early 2022 to a recent range of 5% to 5.25%. Despite the break in rate increases, the Fed is likely to raise rates a bit more as it continues the drive toward its goal of a 2% inflation rate. In May (the most recent month for which data was available at press time), the Consumer Price Index rose 4% from a year earlier. And core inflation-which excludes prices from the volatile energy and food sectors-has been more difficult to tame, rising at a 5.3% yearly rate in May. Following the June meeting, most Fed officials expected two more rate increases of one-quarter of a percentage point each in 2023.