Fed raises federal funds rate by 25bps but signals a pause in rate-hiking ahead

The Federal Open Market Committee voted to increase the target federal funds rate by 25 basis points at its May 3 meeting, for a target range of 5.0 percent to 5.25 percent. In addition, the Fed appeared to signal that it may be ready to pause its rate-hiking cycle, removing language from its post-meeting statement about the need for “some additional policy firming.”

The Fed has raised rates 5.0 percent since it began its rate hiking in early 2022 as part of its efforts to curb inflation.

In a press conference discussing the, Fed chair Jerome Powell acknowledged the challenges that higher rates have posed for some sectors of the economy, such as housing and investment, and noted, “the economy is likely to face further headwinds from tighter credit conditions.”

Reactions to the Fed’s move were mixed. In a research brief, CBRE noted, “Hiking rates just days after the second-largest bank failure in U.S. history shows that the Fed remains focused on redu