By CHRISTOPHER RUGABER | AP Economics Writer
WASHINGTON — The Federal Reserve raised its key interest rate Wednesday for the 11th time in 17 months, a streak of hikes that are intended to curb inflation but that also carry the risk of going too far and triggering a recession.
The move lifted the Fed’s benchmark short-term rate from roughly 5.1% to 5.3% — its highest level since 2001. Coming on top of its previous rate hikes, the Fed’s latest move could lead to further increases in the costs of mortgages, auto loans, credit cards and business borrowing.
Though inflation has eased to its slowest pace in two years, Wednesday’s hike reflects the concern of Fed officials that the economy is still growing too fast for inflation to fall back to their 2% target. With consumer confidence reaching its highest level in two years, Americans keep spending — crowding airplanes, traveling overseas and flocking to concerts and movie theaters. Most crucially, businesses keep hiring, with the unemployment rate still near half-century lows.
In a statement, the Fed said the economy “has been expanding at a moderate pace,” a slight upgrade from its assessment in June. It’s a sign that it sees the economy as slightly healthier than it did just last month.
A key question swirling around the Fed is whether Wednesday’s increase will be its last or whether it will hike again later this year. Speaking at a news conference after the Fed announced its latest hike, Chair Jerome Powell said the central bank has made no decisions about any future rate increases. But he made clear that the fight against inflation isn’t over.
“The process of getting inflation down to 2% has a long way to go,” Powell said.
He stressed that the Fed’s policymakers will assess a range of incoming economic data in determining what action, if any, to take at their next policy meeting. When the officials last met in June, they signaled that they expected to raise rates twice more. By the…
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