The Federal Reserve may hold off on another rate hike. Does that mean a break for your finances?
CBSJun 06, 2023
US Fed Holds Interest Rate Steady for 2nd Time
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Image copyright: Federalreserve/Flickr [via Wikimedia Commons]
The Facts
The US Federal Reserve announced Wednesday that it will not increase interest rates after concluding a two-day meeting that saw officials unanimously decide to leave the benchmark rate unchanged in the 5.25%-5.50% range, where it has stood since July.
This marks the second consecutive time the rate has been held steady after a run of 11 rate hikes since March 2022 to counter runaway inflation, which has seen the benchmark rate reach a 22-year high.
The Spin
Establishment-critical narrative
Powell and the Fed are playing with fire as the central bank pauses interest rate hikes yet again despite persistent inflation. While inflation isn’t at the record-high of 9% from last year, it's still far above the 2% target, and the Fed’s current rate isn’t moving the needle. While it might be painful for some, the US economy must cool down, and that still hasn’t happened yet.
Pro-establishment narrative
The Fed is taking a prudent approach, pausing rate hikes after 11 consecutive increases to observe how the economy responds to the previous moves. While inflation isn’t quite where it needs to be, it has still cooled dramatically over the last year. There's no easy solution to balancing inflation and economic growth, and the Fed is right to keep its options open.
