The Federal Reserve decided Wednesday to keep interest rates at their current level for now, but forecast at least two more rate hikes in the coming months to keep fighting inflation.

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.”

“Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated,” the Fed said in its statement.

But the statement said most Fed officials expect rates to reach 5.6% by the end of the year, suggesting more hikes are coming.

Stocks traded lower on the announcement.

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.

Wholesale prices in the U.S. dropped 0.3% from April to May, another sign that inflationary pressures continue to ease in the face of repeated interest rate hikes by the Fed.

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.

On a month-to-month basis, overall producer prices have now dropped three of the last four months. In May, wholesale inflation was pulled down by a 13.8% drop in gasoline prices.

Excluding volatile food and energy prices, so-called core wholesale inflation was up 0.2% last from April and 2.8% from a year earlier, the mildest gain since February 2021.

 — This article is based in part on wire-service reports.

• Dave Boyer can be reached at dboyer@washingtontimes.com.