The Federal Reserve will announce its first interest rate decision of the year this afternoon.
The central bank is expected to raise its short-term interest rate by a quarter percentage point, a slowing of last year’s aggressive pace of hikes. It would be the eighth increase since the Fed began its tightening cycle in March 2022. The ratcheting back of rates comes as painful price increases ease in the U.S., with annual inflation measured by the Consumer Price Index declining for the sixth consecutive month in December to 6.5%.
The Fed hasn’t raised interest rates since March 2022 . Traditionally the Fed raises interest rates by quarter percentage point increments, but persistently high inflation pushed it to act more aggressively.
Over the course of 2022, the Fed passed four 75-basis-point rate hikes. Rate hikes of that magnitude hadn’t previously occurred since 1994. The Fed’s cumulative rate hikes last year raised the benchmark federal-funds rate by 4.25%.
At this time last year, economists questioned why the Fed didn’t start raising interest rates. But now they’re wondering when the Fed will stop as it walks a shaky tightrope between lowering inflation to its 2% target and pushing the economy into recession.
Follow along for live coverage leading up to the rate hike decision and Fed Chairman Jerome Powell’s news conference.
When is the Fed rate decision?
The Fed’s decision on interest rates comes out at 2 p.m. ET.
When is Powell speaking?
The Fed Chairman’s news conference will begin 30 minutes after the rate decision is announced at 2:30 p.m. ET.
Elisabeth Buchwald is a personal finance and markets correspondent for USA TODAY. You can follow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here
Story Credit: usatoday.com