The <a href="https://www.thenationalnews.com/tags/federal-reserve/" target="_blank">Federal Reserve</a> on Wednesday raised <a href="https://www.thenationalnews.com/tags/interest-rates/" target="_blank">US interest rates</a> by 25 basis points, its 11th increase since March 2022 as part of its bid to lower inflationary pressure on the nation's economy. Wednesday's announcement brings the Fed's benchmark rate to the target range of 5.25 per cent and 5.5 per cent, the highest in 22 years. The central bank skipped a rate increase last month. “Inflation has moderated somewhat since the middle of last year. Nonetheless, the process of getting inflation back down to 2 per cent, has a long way to go,” Fed Chairman Jerome Powell told reporters. Mr Powell last month said the decision to skip raising interest rates was an opportunity to assess their effects on the economy. He said nothing had been decided for when the committee next meets, in September. “We haven't made any decisions about future meetings,” Mr Powell said. “I would say it is certainly possible that we would raise funds again at the September meeting if the data warranted. "And I would also say it's possible that we would choose to hold steady at that meeting.” Fed officials last month expected that two more rates would be coming this year, including the increase announced on Wednesday. For more than a year, the central bank has sought to slow down the world's largest economy without tipping it into a recession. Interest rate increases are meant to slow down the economy by raising borrowing costs. The Fed's aggressive interest rate increases appear to have slowed the economy but not at a rate that could cause a recession. Still, officials have wanted to see greater clarity in a largely confusing economic picture clouded further by this year's <a href="https://www.thenationalnews.com/business/banking/2023/06/29/recent-bank-failures-expose-vulnerabilities-jerome-powell-says/" target="_blank">banking turmoil</a>. <a href="https://www.thenationalnews.com/business/economy/2023/07/12/inflation-rate-cpi-june-2023/" target="_blank">Inflation</a> has significantly fallen since it peaked at 9.1 per cent last summer. Inflation in June was measured at 3 per cent, still above the Fed's 2 per cent goal. The central bank's preferred metric gauge will be released on Friday. That confusion has largely been brought by the labour market, which remains robust. And while job growth did cool slightly last month, the 209,000 jobs added showed that hiring remains strong. On average, employers have added 244,000 jobs a month in the first six months of the year. “A pace below that seen earlier in the year but still a strong pace,” Mr Powell said, noting that supply and demand is beginning to come into better balance. The nation's gross domestic product also came in stronger than expected at 2 per cent for the first quarter this year. However, that is lower than the two preceding quarters of 2.6 per cent and 3.2 per cent, showing that the economy is slowing but remains strong. This data has led some analysts to revise their recession predictions. What first seemed like a near-certainty is now shifting to an improbability. A survey released by the National Association of Business Economics this week showed that 71 per cent of panelists believe the probability of the US entering a recession in the next 12 months is 50 per cent or less. Goldman Sachs economists have also cut the chances of the US entering a recession to 20 per cent, saying that recent data will bring inflation down without a significant downturn. The staff at the Federal Reserve also no longer anticipate a recession this year, Mr Powell said.
