CUNA Senior Economist Dawit Kebede, PhD, issued the following statement following the Federal Reserve meeting today:    

“The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate to 5.25% - 5.5%, an increase of 25 basis points after pausing rate hikes in June. Headline inflation eased to 3% last month but the FOMC believes getting it back down to 2% target is not done yet. Core inflation, which excludes volatile food and energy prices and is indicative of future prices, is 4.8%. 

“Recent economic indicators show that things are going in the right direction to bring prices down. Job gains are cooling, wages are moderating, and labor demand and supply are in a better balance. However, the Federal Reserve believes it needs to see more data in the coming months continuing this trend before they decide to hold rates steady or raise more. 

“Current interest rates are already restrictive and credit conditions are tight for businesses and households. Since monetary policy impacts economic activity with a lag, it is more appropriate to wait and see as factors causing inflation are easing. Additional rate hikes reduce the probability of a soft landing where prices come down to target without causing economic pain.”