Fed officials have been aggressively tightening since the 1980s, and they have raised the benchmark borrowing rate by three-quarters of a point in each of the four meetings that have taken place since late October. Those hikes have made loans to consumers and businesses more expensive. They have also raised the risk of a recession. However, the US job market remains solid, and the unemployment rate remains low.
A key Federal Reserve official said the economy has yet to experience the full impact of rate hikes, which is why the central bank is not yet prepared to pause. However, a small number of officials thought it would be better to wait until inflation pressures recede before slowing the pace of increases.
Earlier this month, Federal Reserve Chairman Jerome Powell suggested that the rate hikes would probably slow. The central bank raised the key short-term rate by half a point in mid-December, and all 19 officials supported the decision.
Powell pushed back against the expectation of a premature pause in rate hikes. Instead, he said the pace of increases would likely slow, although it’s too early to know how that would affect the economy.
