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The Federal Open Market Committee left interest rates unchanged at the end of its June meeting, following 10 consecutive rate hikes.

What’s going on: The Federal Reserve kept the target federal funds rate at 5.00% to 5.25%, which is five times higher than it was in March 2022.

• Though there have been signs in recent months that inflation is cooling, goods prices continue to rise at an elevated pace, which means the central bank will likely keep tighter monetary policies in place.  

What’s next: The Fed signaled that two more rate increases are on the horizon for 2023.

• Fed officials estimate they will move the key rate up by an additional half percentage point, to 5.50% to 5.75%.
• The bank expects to cut rates in 2024 and 2025, however, once inflation cools.

The last word: “On the current economy, the Federal Reserve notes continued modest growth in activity, with the labor market remaining solid,” NAM Chief Economist Chad Moutray said.

• “Yet the committee continues to closely monitor the tightening of lending conditions following the recent banking crisis, with an eye on how those developments might ‘weigh on economic activity, hiring and inflation.’”