The U.S Federal Reserve bank has left the interest rates unchanged on Wednesday. The benchmark lending rate continues to be between 5% and 5.25%. Before the pause, the FED had increased the rate for 10 consecutive times.
However, the new economic projections signal two small rate hikes of 0.25% each, before the end of the year. By this, the benchmark overnight interest rate would rise from the current 5%-5.25% to 5.5%-5.75% by 2023 end.
This comes amid a slower decline in the inflation in U.S. Alongside the declining inflation, the U.S. policymakers are foreseeing a 100 basis point cuts in 2024.
Further decisions on the interest rate would, "take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments," the FOMC statement said.
The Federal Open Market Committee (FOMC) also pointed out that holding the interest rate would allow the committee to get additional information and its implications for monetary policy.
"Holding the target (interest rate) range steady at this meeting allows the committee to assess additional information and its implications for monetary policy," the rate-setting Federal Open Market Committee said in a unanimous policy statement issued at the end of its latest two-day meeting.
The FOMC will take another 6 weeks to see the impact of the policy move. The FOMC next meets for two days on 25th and 26th July.