The Federal Reserve on Wednesday held interest rates steady for the eighth straight time as widely expected.
Policymakers raised interest rates sharply in 2022 and 2023 to the highest level in more than two decades in a bid to slow the economy and cool inflation. Officials are now grappling with when they should take their foot off the brake. They entered 2024 expecting to reduce rates at least three times this year, but have repeatedly pushed back their plans, even though inflation eased in April, May and June.
Higher interest rates tend to create higher rates on consumer and business loans, which then slows the economy by forcing employers to cut back on spending. Higher rates helped to push the average rate on 30-year mortgages above 8% for the first time in decades last year. Borrowing costs for everything from home equity lines of credit, auto loans and credit cards have also spiked.
Yet the rapid rise in rates has not stopped consumers from spending or businesses from hiring. The labor market is continuing to chug along at a healthy pace, with employers adding 272,000 new workers in May. Job openings also remain higher than the typical pre-pandemic level, although the unemployment rate recently ticked higher to 4%.
This is a developing story. Please check back for updates.