WASHINGTON - The Federal ReserveFederal Reserve raised its target interest rate by a quarter of a percentage point on February 1, but continued to promise continued increases in borrowing costs as part of its still unresolved battle against inflation.
Inflation has eased slightly but remains elevated, the US central bank said in a statement that marked the progress made in lowering the pace of price increases from the 40-year highs hit last year.
Russia's war in Ukraine, for example, added to the elevated global uncertainty the Fed said. Policymakers dropped the language of earlier statements citing the COVID-19 epidemic and the war as direct contributors to rising prices.
The Fed said the US economy was enjoying modest growth and robust job gains, with policymakers still closely watching the inflation risks. The Federal Open Market Committee anticipates that ongoing increases in the target range will be appropriate in order to achieve a stance of monetary policy that is sufficiently restrictive to return inflation to 2 per cent over time.
The overnight interest rate was lowered to a range between 4.5 per cent and 4.75 per cent, a move widely anticipated by investors and flagged by US central bankers ahead of this week's two-day policy session.
In keeping the promise of more rate hikes to come, the Fed pushed back against investor expectations that it was ready to flag the end of the current tightening cycle as a nod to the fact that inflation has been steadily declining for six months.