Benchmark range stays in the 5.25% - 5.5% range
As expected by investors and economists, the Federal Reserve declined to raise interest rates at this time. This keeps the benchmark range in the 5.25%-5.5% range.
The Fed has raised interest rates 11 times since March 2022 in an attempt to rein-in rapid inflation that hasn’t been seen in decades. Although the central bank passed on raising rates this time, it signals one more hike is likely this year..
Economic indicators have shown some signs the economy is cooling. The Personal Consumption Expenditures Index, which excludes the cost of the volatile food and energy sectors, rose 4.2% in July, up from 4.1% in June, but down from the 4.5%-4.6% where it was the first half of the year. The Consumer Price Index rose 4.3% on a core basis in August, down 4.7% in July, the slowest pace since October 2021.
The interest rate increases boost borrowing costs for consumers. For example, credit card interest rates have risen about 4% since the rate increases started, and mortgage rates have increased about 3% in that same time frame. The Fed hopes the higher interest rates will slow consumer spending and cool off record inflation.