RTTNews) - In a widely anticipated move, the Federal Reserve announced on Wednesday that it has decided to leave interest rates unchanged.
The Fed said it decided to maintain the target range for the federal funds rate at 5.25 to 5.50 percent after raising rates by 25 basis points in July.
However, the central bank's latest projections suggest Fed officials expect one more rate hike this year, forecasting a median rate of 5.6 percent by the end of 2023.
While the forecast for the end of the year was unchanged from June, the latest projections indicate officials expect rates to remain higher for longer than previously anticipated.
The forecast for rates at the end of 2024 was raised to 5.1 percent from 4.6 percent in June, while the outlook for rates at the end of 2025 was increased to 3.9 percent from 3.4 percent.
Expectations for rates to remain higher for longer may reflect an improved assessment of the economy, with the Fed's statement saying economic activity has been expanding at a "solid pace" compared to the "moderate pace" described in July.
The statement also said job gains have slowed in recent months but remain strong while noting inflation remains elevated.
The Fed reiterated it remains highly attentive to inflation risks and acknowledged additional policy firming may be appropriate to return inflation to 2 percent over time.
In determining whether future rate hikes are necessary, the Fed said it will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.
The Fed's next monetary policy meeting is scheduled for October 31-November 1, with CME Group's FedWatch Tool currently indicating a 68.0 percent chance rates will remain unchanged and a 31.3 percent chance of a quarter point rate increase.