Federal Reserve Raises Interest Rates to Combat Inflationary Pressures

The Federal Reserve left the main U.S. interest rate unchanged Wednesday, waiting to see if its historic series of rate hikes over the last 18 months gets inflation under control.

The central bank kept its main policy rate in the range of 5.25% to 5.50%, citing an easing of economic conditions while also acknowledging that inflation is still higher than its 2% target.

In a statement, the Fed said the economy is in solid shape, with job gains slowing and tighter credit conditions likely to slow economic activity and stem inflation. 

The Fed had raised interest rates at a historically fast pace in the last 18 months, as it increased its main rate at 11 consecutive meetings from March last year until its meeting in July.

It did that to try to get inflation under control, as U.S. consumer prices began to spike in late 2021 and hit 40-year highs last summer.

In August, the Bureau of Labor Statistics said prices for consumers were up 3.7% from the same period last year. That's above the 2% annual level the Fed says it wants to see, but is a big change from last year's peak of 9.1%.

The Fed concluded Wednesday that the situation had improved enough for it to take a wait-and-see approach, at least for another month.

The central bank had cut interest rates to a range of zero percent to 0.25% after the start of the Covid pandemic. Rates were also at that