Officials at the Federal Reserve are divided on whether to pause the central bank’s aggressive campaign of interest rate hikes. In speeches and media interviews this week, Fed policymakers gave contrasting views on whether to raise rates for the 11th time in a row when the decision-making committee meets in June. Some want to raise the benchmark fed funds rate at least once more, to make sure inflation is subdued, while others seemed more open to holding it flat to see if they’ve done enough already.

The Federal Reserve has raised its rate 10 times since March 2022, bringing it to a range of 5-5.25%. Raising the interest rate to its highest since 2007—from the near-zero rate that was meant to stimulate the economy through the pandemic—has sent shockwaves through the financial world. Consumer 伟民配资_在线配资炒股:debt like credit cards has gotten costlier, 伟民配资_在线配资炒股:mortgage rates have spiked, businesses that thrived on easy money have laid off thousands, and 伟民配资_在线配资炒股:at least one bank whose leaders had bet on rates staying low imploded under the pressure.

All this damage is more or less expected and meant to achieve a purpose: The Fed’s rate hikes are supposed to discourage borrowing and spending. Officials hope raising rates will dampen spending appetite enough to rebalance the supply-demand equation and in turn quell the stubbornly high inflation that took hold in 2021. They also aim to cool the red-hot labor market so that bigger paychecks don’t start to fuel an out-of-control inflation spiral. 

If rates get too high though, the economy could slow too much and fall into a recession, and Fed officials are debating whether another rate hike is the right move in this balancing act. 

Federal Reserve chair Jerome Powell said Friday the aftershocks of recent bank failures may lead to the Fed not raising rates as much. In response to the financial turmoil that started with the collapse of Silicon Valley Bank, banks have made it harder for businesses and individuals to get loans.

Those tighter credit conditions are “likely to weigh on economic growth, hiring, and inflation,” Powell said at a research conference Friday. “So as a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals. Of course, the extent of that is highly uncertain.”

Dallas Fed president Lorie Logan said she favored another hike.

“The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet.” Logan said Thursday in prepared remarks for a speech to the Texas Bankers Association in San Antonio. 

Taken together, the comments by Powell, Logan, and other Fed officials this week implied the “pause" side has the upper hand, at least in the view of traders, according to CME’s FedWatch tool, which forecasts rate hikes based on bond trading data. As of Friday, the FedWatch prediction leaned almost 80-20 in favor of no rate hike in June.