The Federal Reserve, having raised interest rates at the fastest pace in four decades, is poised Wednesday to leave rates alone for the first time in 15 months to allow time to gauge the impact of its aggressive drive to tame inflation
, is poised Wednesday to leave rates alone for the first time in 15 months to allow time to gauge the impact of its aggressive drive to tame inflation.— with another rate hike likely as soon as their next meeting in late July.
Yet much of that drop reflected sharply lower gas prices and slowdown in food inflation. Excluding volatile food and energy costs, uncomfortably high inflation persisted: So-called core prices rose 5.3% year over year, down from 5.5% in April but far above the Fed's 2% annual target. Wholesale used car prices, for example, fell in May, raising the prospect that retail prices will follow suit. And rents are expected to ease in the coming months as new leases are signed with milder price increases. Those lower prices, though, will take time to feed into the government's measure.
On Wednesday, Fed officials will also update their quarterly economic projections, including a forecast of what their key rate will be at year's end. Most economists expect that rate to tick up from the current 5.1% to 5.4%. That would signal that the central bank doesn't think it has yet curbed inflation. If inflation were to remain chronically high in the months ahead, the Fed might decide to continuing raising rates.
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