Fed skips rate hike, gains time to analyse more data

Rate-setters at the Federal Reserve skipped a rate hike at Wednesday's meeting in order to buy time to gather further information before possibly tightening policy more.

Yet in its policy statement, the Federal Reserve described job gains over recent months as "robust" and said that inflation remained "elevated".

And while tighter credit conditions were expected to drag on activity, the jobs market and inflation, just how big those effects would be remained to be seen, the central bank said.

"Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy," the policy statement read.

"In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

During his presser, Fed chairman Jerome Powell went further, saying that a majority of policymakers believed that more hikes would "likely" be necessary.

Indeed, the latest set of economic forecasts from Fed officials showed that a majority were expecting that 50 basis points of additional rate hikes would be needed by the end of 2023.

Worth noting, Powell also indicated that progress on lowering core inflation remained too slow.

Aside from reiterating that the Federal Open Market Committee, which decides on policy "remained highly attentive to inflation risks", policymakers also reaffirmed their strong commitment to their 2% inflation target.

Wednesday's vote by the FOMC to stay put on rates was unanimous.