The Fed holds rates steady, pausing its rate-hiking campaign

The Federal Reserve said Wednesday it would pause its historic rate-hiking campaign as it waits for the effects to trickle further through the economy, but signaled that additional rate hikes are likely this year.

The vote to skip a rate increase this meeting was unanimous.

Since March 2022, Fed officials have raised the central bank's benchmark interest rate 10 times in a row in an attempt to cool the US economy and battle inflation that is still double the Fed's target.

The Fed's post-meeting statement confirmed that officials deem the pause a prudent move, but most officials think additional hikes are necessary this year, according to the Fed's latest Summary of Economic Projections.

"Looking ahead, nearly all Committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down 2% over time," Fed Chair Jerome Powell said in his post-meeting news conference.

Most officials estimate the federal funds rate will top out at a range of 5.63-5.87% in 2023, suggesting there might be as many as two more quarter-point hikes this year. Rate increases larger than a quarter point are not likely since the Fed is inching closer to its inflation goal and officials thought it made "obvious sense to moderate our rate hikes as we got closer to our destination," Powell said.

Future policy moves depend on what economic indicators show in the coming weeks and months, including the resilient job market. Payroll growth remains solid, as do wage gains, which put some upward pressure on prices. Top economists argue the still-tight labor market will prove to be a stubborn source of inflation that would need to rebalance in order to help inflation successfully fall to the central bank's 2% target. Most officials in the Federal Open Market Committee, which sets monetary policy, expect the unemployment rate to rise to a range of 4-4.1% this year.