The American central bank decided against the hike on June 14, amid its scrutiny of its 10 previous rate hikes. Nevertheless, the Federal Open Market Committee (FOMC) projected two more quarter percentage hikes before the year ends.
"We have raised our policy interest rate by five percentage points, and we've continued to reduce our security holdings at a brisk pace," Federal Reserve Chairman Jerome Powell said at a press conference. "We've covered a lot of ground and the full effects of our tightening have yet to be felt."
Powell noted that the country's economy has seen growth, and the job market is holding up better than expected under the weight of the aggressive monetary policy tightening of the past year. He explained that the pause was out of caution to allow the Fed to gather more information before determining if rates do need to rise again.
The central bankers said they will take another six weeks to see the impacts of policy moves as the Fed fights an inflation battle that has shown some promising signs lately. The decision left the Fed's key borrowing rate in a target range of five to 5.25 percent.
"Holding the target range steady at this meeting allows the committee to assess additional information and its implications for monetary policy," according to a post-meeting statement from the Fed. Its next meeting is set on July 25 and 26.
CNBC reported that the markets were widely anticipating the Fed to skip the upcoming July meeting as an increase is highly expected, especially since policymakers, particularly Powell and Vice Chair Philip Jefferson, have indicated that some changes in approach could be in order.
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"Given the strong labor market, the Fed has room to crush inflation and they don't want to miss their chance. Still, policymakers skipped hiking rates so they can monitor the data," said David Russell, vice president of market intelligence at TradeStation.
"This increases the importance of each incremental economic report. More good news like this week's CPI (consumer price index) and PPI (producer price index) could let traders look past the Fed's tough talk and see a dovish turn later in the year. Powell is still a barking dog, but may be losing his bite."
Greedy corporations still increase prices despite falling input costs
But despite indications that inflation is already slowing down, consumers still face high costs for many items.
A recent report from consumer-advocacy group Accountable.US revealed that food and consumer-goods giants in the S&P 500 are still raising prices even as input costs are falling. The research organization said these companies still attach their products with hefty price tags to protect their "cushioned corporate profits."
The report named Kimberly-Clark Corp., PepsiCo Inc., General Mills Inc. and Tyson Foods Inc. as corporations that have bragged their ability to raise prices, earn tidy profits and reward their shareholders as they go during recent earnings calls.
"Higher interest rates haven't stopped S&P companies, especially in the big food industry, from raising consumer prices despite reporting billions in extranet earnings and over a trillion dollars in new giveaways to wealthy investors," said Liz Zelnick, director of economic security and corporate power at Accountable.US.
"Corporate greed is a stubborn thing and requires serious action from Congress. The Fed has not seen an adequate return on its investment in a policy that has already created fissures in the economy that could lead to recession," she pointed out. (Related: GREEDFLATION: Predatory corporations still raising prices for bigger revenue despite falling input costs.)
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Watch Gregory Mannarino warn about a middle-class wipeout as a result of the Fed halting rate hikes.
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