“Inflation Takes a Breather: Fed Puts Rate Hikes on Pause

by Safe Retirement Reports

The Federal Reserve Board of Governors announced Wednesday that it will pause its policy of gradually increasing interest rates due to slowing inflation. The decision came after a long review of the economic data, including a slowdown in the rate of inflation and an increased rate of job growth.

Inflation has been running at or below the Fed’s 2 percent target for several months, which is causing Fed officials to take a closer look at why today’s economic environment might be different from the past. While the economy is enjoying healthy consumer spending and job creation, wage growth remains relatively subdued and businesses have not increased their investment plans as much as many economists have hoped.

The Fed has been gradually increasing rates since late 2015 as a way to help keep inflation around its 2 percent target, but the latest data suggests that inflation is slowing enough to prompt the central bank to pause its rate hike plan. This move also gives the Fed more room to maneuver if inflation weakens further and helps it shore up its credibility as an inflation fighter.

The Federal Reserve Board’s decision to pause the rate hike plan sends a signal that policymakers are reassessing the data and, as always, doing what they can to best serve the United States economy. While it may mean short-term relief for consumers, businesses, and other borrowers, policy makers will need to assess the potential effects of lowered inflation in the coming months and adjust their strategy accordingly.

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