Fed hikes rates again even as inflation cools
For now, the central bank’s rate-setting committee signaled that borrowing costs will increase further, saying rate hikes will be "ongoing."
TroibNews 
The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point, bringing policymakers another step closer to an expected pause in their inflation fight sometime this year.
For now, the central bank’s rate-setting committee signaled that borrowing costs will increase further, saying rate hikes will be "ongoing." But Wednesday’s move is the smallest hike since last March, a reflection of the fact that price spikes have been cooling for months.
"Inflation has eased somewhat but remains elevated," the committee said in a statement following two days of meetings. The Fed's main borrowing rate now sits between 4.5 percent and 4.75 percent.
Unemployment is still at modern lows, even after aggressive rate hikes for the past year by the Fed, feeding hopes that the U.S. may be able to avoid a recession — a crucial goal for President Joe Biden before the 2024 election. But that will hinge on how much more the central bank increases rates and how long it holds them at punishingly high levels.
Fed officials have signaled that they expect to raise rates to about 5 percent before stopping, but that will depend on whether inflation continues its downward trend. They're also closely monitoring worker pay, which grew about 5 percent in 2022. Chair Jerome Powell has said inflation probably won't be able to return to the Fed's 2 percent target without a deceleration in wage growth.
The economy grew at a 2.9 percent annualized pace in the last three quarters of the year, suggesting the U.S. is still far from dipping into a recession. But growth could slow further as the Fed's rate moves feed through to economic activity.
A closely watched survey from the Institute of Supply Management on Wednesday showed the manufacturing sector is contracting, and the housing market has been hammered for months by high mortgage rates, though the job market has remained resilient.
"The Committee is strongly committed to returning inflation to its 2 percent objective," the Fed said in its statement.
