The Federal Reserve, having raised interest rates at the fastest pace in four decades, is poised Wednesday to leave rates alone for the first time in 15 months to allow time to gauge the impact of its aggressive drive to tame inflation. Yet top Fed officials have made clear that any such pause may be brief — more of a “skip” — with another rate hike likely as soon as their next meeting in late July. Fed Chair Jerome Powell and other top policymakers have also indicated that they want to assess how much a pullback in bank lending might be weakening the economy.
They’re trying to find the middle ground. More 0% rates would destroy the economy with inflation, but 20% rates would destroy the economy with corporate slowdowns, an epidemic of bank failures, and great-depression scale unemployment. Inflation is high but trending down so they think the current policy is working.