INSUBCONTINENT EXCLUSIVE:
WASHINGTON: The US Federal Reserve raised its benchmark lending rate on Wednesday to the highest level since 2001 to tackle above-target
inflation, and signaled it could hike again later this year amid improving economic prospects."Policy has not been restrictive enough for
long enough to have its full desired effects," Fed Chair Jerome Powell told reporters after the decision to lift interest rates by a quarter
percentage-point was announced."So we intend, again, to keep policy restrictive until we're confident that inflation is coming down
sustainably toward our two percent target -- and we're prepared to further tighten if that is appropriate," he added.The increase, after a
brief pause in June, brings the Fed's key lending rate to a range between 5.25 percent and 5.5 percent.In a statement, the US central bank
said it will "continue to assess additional information and its implications for monetary policy," looking at a range of data points "in
determining the extent of additional policy firming."This indicates that officials see the possibility of more monetary tightening
ahead."We're going to be going meeting by meeting," Powell said.At the previous meeting of the rate-setting Federal Open Market Committee
(FOMC) in June, the median forecast was for two additional rate hikes this year.The latest quarter percentage-point rise, which was in line
with analysts' expectations, is the Fed's 11th since it began an aggressive campaign of monetary tightening in March 2022 in response to
rising prices.Although inflation has continued to fall since the decision in June to pause rate hikes, it remains above target -- suggesting
more policy action may be needed."Inflation has moderated somewhat since the middle of last year," Powell said on Wednesday, adding that the
"process of getting inflation back down to two percent has a long way to go."Meanwhile, unemployment has remained close to historic lows and
economic growth for the first quarter was revised up sharply on resilient consumer spending data."The Fed will stand its ground and hold
rates high well into 2024, barring a more pronounced slowdown in the economy and rise in unemployment," KPMG US's chief economist Diane
Swonk wrote in a note published shortly after the Fed decision on Wednesday."The goal is to defeat, not just cool, inflation," she said,
adding that KPMG expects another rate hike in November, "given the time needed to assess how rapidly the economy is actually cooling and the
risk of noise due to strikes."Recent positive economic news has increased the chances of a so-called "soft landing," in which the Fed
succeeds in bringing down inflation by raising interest rates while avoiding a recession and a surge in joblessness.On Wednesday, Powell
reiterated that he felt a soft landing remains possible."It has been my view consistently that we do have a shot," he said
"That's been my view, that's still my view."Powell also told reporters that his staff's expectations for a recession to start later
this year has diminished."The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the
resilience of the economy recently, they are no longer forecasting a recession," he added."This is quite the pivot in a month," Oxford
Economics' chief US economist Ryan Sweet wrote in a note to clients regarding the Fed staff's updated outlook.While investors had more or
less priced in a hike on Wednesday, they have been less confident about the chances of another increase at the next Fed meeting in
September.Futures traders currently assign a probability of just over 20 percent that the FOMC will raise rates again in September,
