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The Fed's new challenge: Stay on the gas or tap the brakes?

By Rachel Siegel

22 Jan 2023 · 4 min read

As they debate the scale of the next hike in interest rates, Federal Reserve officials are grappling with the broader needs of an economy that's expected to keep slowing. The Washington Post reports.

Curated by informed

The Federal Reserve spent most of last year in emergency mode, scrambling to catch up to inflation. Now central bankers agree that phase of their work is wrapping up. What they're still trying to figure out is what comes next.

Fed officials will convene for their first policy meeting of the year on Jan. 31 and Feb. 1, when they'll raise interest rates for the eighth time in a row to combat pandemic-era inflation. Exactly how much isn't clear yet. Financial markets and analysts increasingly expect a quarter-point hike - down from a half-point in December - thanks in part to encouraging data showing that inflation continues to fall. Smaller hikes from now on would also grant the Fed more flexibility, economists say, as the central bank susses out how much higher rates need to go. Officials still think rates have to rise a bit, despite signs that inflation has peaked.

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