In response to slowing inflation and increased uncertainty in the economic outlook, the Federal Reserve is pausing its rate hikes. The central bank recently left interest rates unchanged, raising them by only 0.25% this year despite forecasting additional rate hikes of 0.75%.
The Federal Reserve stated that they are monitoring incoming data closely, and that it will “act as appropriate to sustain the expansion.” This move comes after months of speculation that the Federal Reserve was close to pausing rate hikes. Analysts expect this pause to last until inflation starts to pick up again, or the economic outlook becomes more certain.
The pause in rate hikes is intended to give the economy extra time to adjust to the current economic environment. This should encourage businesses to invest more and hire more workers, while also helping to keep borrowing costs low for individuals and businesses. Low borrowing costs can encourage more spending, which helps to stimulate the economy.