Interest Rate Hikes To Be Resumed By Federal Reserve After Pause in June

The Federal Reserve intends to resume the interest rate hikes after unanimously agreeing on a pause in mid-June. Further reports say the increase was proposed despite a growing consensus that the high inflation rates must be put to an end.

During the Federal Open Market Committee meeting in June, the officials of the Federal Reserve indicated that they intend to resume the interest rate hikes. The officials favored 25 basis point interest rate hikes in lieu of the interest pause and were eventually supported by the committee.

However, an article in Financial Times states that the interest rate hikes were proposed despite a growing consensus that more restrictions are needed to put an end to the high inflation rates in the U.S. Furthermore, a competitive cycle of interest rate hikes also resulted in a restricted labor market and upside risks to inflation.

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Interest Rate Hikes Discussed During June Meeting

According to an article in CBS News, following the interest rate hikes for ten consecutive meetings, the officials of the Federal Reserve rather opted to hold the interest steady at a range between 5% and 5.25%. On July 5, John Williams of the New York Federal Reserve reiterated that the central bank is determined to discuss inflation.

Williams added that there is more to do with the interest rate hikes considering that the demand is still strong and the housing market had stabilized. However, on the contrary, Federal Reserve Chair Jay Powell argued that the interest pause is justified stating that the interest rate hikes still need to completely make their way through the U.S. economy.

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