The Federal Reserve raised interest rates by 25 basis points at its July meeting, bringing the benchmark fed funds rate to a level of 5.25-5.50%, a 22-year high. In the statement, the Fed reiterated its fight against inflation, saying "inflation remains elevated" and "the Committee remains highly attentive to inflation risks." Yahoo Finance Federal Reserve Reporter Jennifer Schonberger has the breaking details.
Video Transcript
JENNIFER SCHONBERGER: The Federal Reserve raising its short term benchmark interest rate by a quarter percentage point to a new range of 5.25% 5.50% while upgrading its assessment of the economy and leaving the door open for further rate hikes. This move marking a 22-year high for the Fed funds rate and also the 11th rate hike in over just nearly a year and a half after taking a breather in June.
Now, the Fed reiterating language in its statement to retain optionality for future rate hikes saying, quote, "in determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time." Now, the Fed also reiterating that it will look at previous rate hikes when it looks to assess whether to do future rate hikes and their impact on the economy and inflation as well as lag effects.
Now, there was no change in language in the statement on inflation. Officials still see inflation as quote, "elevated" and note that they remain highly attentive to inflation risks. Now also, as I mentioned, Fed officials upgrading their assessment of the economy. They see growth now characterized as moderate up from modest back in June. This decision was unanimous. Back to you.
SEANA SMITH: Jennifer, we're going to be hearing from Fed Chair Jay Powell in just about 30 minutes from now. You mentioned the fact that the Fed did leave the door open for further rate hikes. What do you think investors are going to be watching for here in just about 30 minutes?
JENNIFER SCHONBERGER: I think that Fed Chair Powell is really going to strike a hawkish tone here. He's going to continue to talk tough on inflation, and investors are really going to want to hear what it's going to take for the Fed to go to an extended pause. Wall Street thinks that this could mark the peak on interest rates for this cycle.
However, officials not even acknowledging that cooler CPI print in their statement. They still characterize inflation as elevated. And thus, I think Fed chair Powell will continue along those lines, and so Wall Street may be a little bit disappointed here. I think the Fed is going to stick to the script, and Fed chair Powell is going to still leave the door open for an additional rate hike sometime later this year.
SEANA SMITH: All right, Jennifer Schonberger, we'll let you go because we know you're going to be inside the room with Powell. We'll check in with you after the press conference. Thanks.