On the heels of its 10th consecutive rate hike since March 2022, the Federal Reserve hedged its bets on pausing rate adjustments.
In keeping with expectations, the Fed announced its third consecutive 25 bps increase at its May 3 FOMC meeting. The rate hike is the 10th straight adjustment by the central bank since it began implementing its tightening cycle in March 2022 to combat rising inflation and move the federal funds rate over 5% for the first time since 2007.
Indications are that the Fed is nearing the end of its tightening cycle, driven in part by the omission of a previous meeting statement that noted the committee anticipated some additional policy firming may be appropriate.
“There’s a sense that we’re much closer to the end of this [tightening cycle] than the beginning,” stated Fed chair Jerome Powell in his press conference, “but that’s going to be an ongoing assessment.” His remarks did leave the door open for more rate hikes from the Fed in the future, indicating that any action on interest rates would be data-dependent.
“It is clear that the Fed is going to continue to pursue its 2% inflation target irrespective of what markets speculate about that target’s achievability,” said Raymond James Chief Economist Eugenio Alemán.