Fed raises key rate but hints it may pause amid bank turmoil

It replaced it with language that said it will consider a range of factors in determining the extent to which future hikes might be needed.The Feds rate increases over the past 14 months have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession.

The Federal Reserve reinforced its fight against high inflation Wednesday by raising its key interest rate by a quarter-point to the highest level in 16 years. But the Fed also signalled that it may now pause the streak of 10 rate hikes that have made borrowing for consumers and businesses steadily more expensive.

In a statement after its latest policy meeting, the Fed removed a previous sentence that had said “some additional” rate hikes might be needed. It replaced it with language that said it will consider a range of factors in “determining the extent” to which future hikes might be needed.

The Fed’s rate increases over the past 14 months have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession. Home sales have plunged as a result. The Fed’s latest move, which raised its benchmark rate to roughly 5.1%, could further increase borrowing costs.

Still, the Fed’s statement offered little indication that its string of rate hikes have made significant progress toward its goal of cooling the economy, the job market and inflation. Inflation has fallen from a peak of 9.1% in June to 5% in March but remains well above the Fed’s 2% target rate.

“Job gains have been robust in recent months, and the unemployment rate has remained low,” the statement said. “Inflation remains elevated.”