Federal Reserve officials continued their assault on rapid inflation Wednesday, raising the central bank's benchmark interest rate by three-quarters of a point in their sixth policy move this year.
But in a statement Wednesday after its two-day meeting, the Fed suggested that it might soon shift to a more deliberate pace of rate increases. The central bank said that in coming months policymakers will be considering the cumulative impact of their fiscal moves on the economy, noting that rate adjustments take time to fully affect growth and inflation.
Overall, the Fed raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years, as part of a streak this year that has made mortgages and other loans increasingly expensive, while potentially heightening the risk of a recession.
Speaking at a news conference Wednesday, Chairman Jerome Powell avoided sending any clear signal of whether the Fed's next rate move in December will be only a half-point, rather than three-quarters. Rate adjustments are typically made in quarter-point increments by the Fed.
Powell sought to emphasize that the central bank would keep raising rates in the coming months, possibly to a higher level than it had forecast in September. "We still have some ways to go," Powell said.
The Fed's campaign to cool the economy has been its fastest since the 1980s, and central bankers have been suggesting for months that they eventually wanted to dial back rate increases.
But inflation has remained stubbornly high, and many economists have wondered when and how the Fed will be able to manage such a pullback.
Central bankers do not want markets to interpret any slowdown as a sign that their resolve to tame price increases has cracked.
"The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time," the Fed statement issued Wednesday said.
The statement added: "In determining the pace of future increases in the target range, 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."
The Commerce Department reported last month that the economy grew during the third quarter at a 2.6% annual rate -- after contracting in the first half of the year -- and employers are still hiring at a solid pace. But the housing market has cratered, and consumers are barely increasing spending.
The average rate on a 30-year fixed mortgage -- just 3.14% a year ago -- has now surpassed 7%, according to mortgage buyer Freddie Mac. Sales of existing homes have dropped now for eight straight months, according to the National Association of Realtors.
Blerina Uruci, an economist at T. Rowe Price, suggested that falling home sales are "the canary in the coal mine" that demonstrate that the Fed's rate increases are weakening a highly interest-rate sensitive sector like housing.
Uruci noted, however, that the Fed's increases haven't yet meaningfully slowed much of the rest of the economy, particularly the job market or consumer demand.
"So long as those two components remain strong," she said, the Fed's policymakers "cannot count on inflation coming down" close to their 2% target within the next two years.
Several Fed officials have said recently that they have yet to see meaningful progress in their fight against rising costs.
Inflation rose 8.2% in September from 12 months earlier, just below the highest rate in 40 years, according to the Labor Department's consumer price index.
A more closely watched inflation gauge, the personal consumption expenditures price index, rose only 6.2% in September from 12 months earlier, the same year-over-year rate reported in August, but down from its 7% peak in June, according to the Commerce Department.
Fed policymakers monitor the latter index to gauge progress toward its 2% inflation goal.
Consumer spending, meanwhile, squeezed by high prices and costlier loans, is barely growing.
Supply chain snarls are easing, which means fewer shortages of goods and parts. Wage growth is plateauing, which, if followed by declines, would reduce inflationary pressures.
Yet the job market remains consistently strong, which could make it harder for the Fed to cool the economy and curb inflation. The Labor Department reported Tuesday that companies posted more job openings in September than in August.
There are now 1.9 available jobs for each unemployed worker, an unusually large supply that will likely push employers to continue raising pay to attract and keep workers.
Those higher labor costs are often passed on to customers in the form of higher prices, thereby fueling more inflation.
The Labor Department is scheduled to release its latest jobs report Friday, providing more clues about the overall state of the labor market. The economy added 263,000 jobs in September, the smallest increase since April 2021.
Information for this article was contributed by Jeanna Smialek of The New York Times, Christopher Rugaber of The Associated Press and Rachel Siegel of The Washington Post.