On May 3, the Federal Reserve increased interest rates by another 0.25% but hinted that further increases may be paused as officials assess the effects of recent bank failures, monitor inflation and eye a possible resolution to the debt ceiling standoff in Washington, according to a the Fed’s Open Market Committee statement and media reports.
“Economic activity expanded at a modest pace in the first quarter,” the Fed said in its statement. “Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.”