From March 2022 through May 2023 the Fed raised rates at 10 successive meetings – by anywhere from a quarter to three quarters of a point – as it fought the worst rise of inflation since the early 1980s. In June the Fed paused before hiking again in the July meet.
Data since the Fed’s last meeting, while generally supporting the view of slowing inflation alongside continued economic growth, has been somewhat mixed as the pace of headline price increases recently jumped. Price increase pressures have showed signs of persistence.
And signs have grown that the job market isn’t as robust as it had been, which helps keep a check on inflation: The pace of hiring has moderated. The number of unfilled openings fell sharply in June and July. And the number of Americans who have started seeking work has jumped.
“Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated.,” the US Fed in a statement.
This week’s Fed meeting comes as central banks around the world are mostly raising rates to fight inflation, which spiked after the pandemic hampered global supply chains, causing shortages and higher prices. Inflation worsened after Russia’s invasion of Ukraine in February 2022 sent oil and other commodity prices spiking. The Fed leads a week jammed with key central bank meetings, with policy announcements in Sweden, Switzerland, Norway, Britain and Japan all due later this week.
The European Central Bank raised its benchmark rate last week for the 10th time to 4%, the highest level on record since the euro was established in 1999, though it signaled that it could be its last hike.
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