The Federal Reserve raised interest rates Wednesday for the 11th time in more than a year to kill inflation, in what investors hope will be the last hike in 2023.
But central bank officials are cautioning that there might be more increases coming.
The central bank's rate-setting committee will assess how much borrowing costs are already crimping growth "in determining the extent [to which further rate hikes] may be appropriate," it said in a statement after meetings this week.
The stock market and the Biden administration are both eager to celebrate a slate of positive economic data. Even as the unemployment rate remains near modern-era lows, annual inflation dropped to 3 percent in June, as measured by the consumer price index, its lowest level since early 2021.
Still, central bank officials are worried about key industries — mainly services like restaurants, hospitals and auto insurance — where prices are climbing faster. They are also weighing the risk that, if they let up, inflation might begin to accelerate once more.
They'll get another snapshot this week of how much rate hikes have been digging into growth; the Commerce Department will put out a preliminary estimate Thursday on how much GDP increased from the end of March to the end of June.
And on Friday, the Labor Department will offer a quarterly update on how much companies are spending on workers — a data point that Fed Chair Jerome Powell watches closely to determine how much a hot job market is contributing to inflation.
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