<p>Federal Reserve officials left interest rates unchanged Wednesday, skipping a rate increase after raising them 10 times in a row, but hinted that they would likely lift them again later this year.</p>.<p>The Fed, in its policy statement, said it was giving itself time to assess how the economy is reacting to what has been a steady campaign to slow demand and wrestle rapid inflation back under control. The central bank has raised rates to a range of 5 per cent to 5.25 per cent over a little more than a year.</p>.<p>But officials predicted that they might raise interest rates even further — to 5.6 per cent this year — based on fresh economic forecasts. That suggests policymakers expect to make two more rate increases by the end of 2023, a clear signal that Fed officials remain concerned about inflation and think they may need to do more to cool growth and control price increases.</p>.<p>“Holding the target range steady at this meeting allows the committee to assess additional information and its implications for monetary policy,” the Fed said in its post-meeting statement. “In determining the extent of additional policy firming that may be appropriate to return inflation to 2 per cent over time, the committee will take into account the cumulative tightening of monetary policy,” among other factors.</p>.<p>Fed officials try to keep inflation climbing at a 2 per cent per year pace, but it has been much more rapid than that since early 2021. That is why central bankers have been rapidly raising interest rates, making mortgages and business loans more expensive in a bid to cool the economy, causing consumers to pull back and forcing companies to stop raising prices so much.</p>.<p>But 15 months into their fight to wrestle inflation lower, Fed officials want to give themselves more time to assess how their policy is playing out in the economy. Central bankers voted unanimously on the decision to leave interest rates unchanged.</p>.<p>Just because Fed officials are moving into a new and more patient stage of their war against rapid price increases does not mean they are giving up on their push to cool inflation. Central bankers have already moved rates up notably, to about 5.1 per cent, and those changes are still trickling through and weighing on the economy. And the prospect of further rate increases this year could reinforce to investors and the public alike that officials are not necessarily done adjusting policy.</p>.<p>Central bankers forecast in their updated economic projections, released Wednesday for the first time since March, that inflation could finish 2023 at 3.2 per cent, and at 3.9 per cent after stripping out food and fuel prices. That projection of the so-called core measure was notably higher than the 3.6 per cent officials had forecast in March, and underscored that officials are increasingly worried that price increases could prove very stubborn.</p>
<p>Federal Reserve officials left interest rates unchanged Wednesday, skipping a rate increase after raising them 10 times in a row, but hinted that they would likely lift them again later this year.</p>.<p>The Fed, in its policy statement, said it was giving itself time to assess how the economy is reacting to what has been a steady campaign to slow demand and wrestle rapid inflation back under control. The central bank has raised rates to a range of 5 per cent to 5.25 per cent over a little more than a year.</p>.<p>But officials predicted that they might raise interest rates even further — to 5.6 per cent this year — based on fresh economic forecasts. That suggests policymakers expect to make two more rate increases by the end of 2023, a clear signal that Fed officials remain concerned about inflation and think they may need to do more to cool growth and control price increases.</p>.<p>“Holding the target range steady at this meeting allows the committee to assess additional information and its implications for monetary policy,” the Fed said in its post-meeting statement. “In determining the extent of additional policy firming that may be appropriate to return inflation to 2 per cent over time, the committee will take into account the cumulative tightening of monetary policy,” among other factors.</p>.<p>Fed officials try to keep inflation climbing at a 2 per cent per year pace, but it has been much more rapid than that since early 2021. That is why central bankers have been rapidly raising interest rates, making mortgages and business loans more expensive in a bid to cool the economy, causing consumers to pull back and forcing companies to stop raising prices so much.</p>.<p>But 15 months into their fight to wrestle inflation lower, Fed officials want to give themselves more time to assess how their policy is playing out in the economy. Central bankers voted unanimously on the decision to leave interest rates unchanged.</p>.<p>Just because Fed officials are moving into a new and more patient stage of their war against rapid price increases does not mean they are giving up on their push to cool inflation. Central bankers have already moved rates up notably, to about 5.1 per cent, and those changes are still trickling through and weighing on the economy. And the prospect of further rate increases this year could reinforce to investors and the public alike that officials are not necessarily done adjusting policy.</p>.<p>Central bankers forecast in their updated economic projections, released Wednesday for the first time since March, that inflation could finish 2023 at 3.2 per cent, and at 3.9 per cent after stripping out food and fuel prices. That projection of the so-called core measure was notably higher than the 3.6 per cent officials had forecast in March, and underscored that officials are increasingly worried that price increases could prove very stubborn.</p>