Fed pauses rate hikes but forecasts more increases as inflation remains too high

The decision keeps the Fed’s benchmark rate in the range of 5 to 5.25%. The central bank’s open-market committee said the economy “has continued to expand at a modest pace.”

But the statement said most Fed officials expect rates to reach 5.6% by the end of the year, suggesting more hikes are coming.Inflation rose in May at an annual rate of 4%, the lowest rate in two years. The Fed, which aims for an inflation rate of 2%, has imposed a series of 10 interest-rate hikes since March 2022 to cool inflation that hit a high of 9.1% in June 2022.

The Labor Department’s producer price index — which measures inflation before it reaches consumers — rose 1.1% last month from May 2022, it said Wednesday, the smallest year-over-year gain since December 2020.

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