Surge in interest rates and a cloudier economic picture to keep Federal Reserve on sidelines

abcnews.go.com:

The Federal Reserve is poised to leave its key interest rate unchanged at a time when the Fed faces an economy that has proved resilient but is nevertheless under pressure from surging interest rates, overseas turmoil and anxious investors

WASHINGTON — The Federal Reserve is poised to leave its key interest rate unchanged Wednesday at a time when the Fed faces an economy that has proved resilient but is nevertheless under pressure from surging interest rates, overseas turmoil and anxious investors.

U.S. economic growth surged in the July-September quarter on the back of robust consumer spending, and inflation showed signs last month of staying uncomfortably high. Chair Jerome Powell will want to make sure that the economy cools and that inflation resumes its descent before signaling any let-up in the Fed's drive to slow inflation to its 2% target level.

At the same time, turbulent financial markets have pushed up longer-term rates on U.S. Treasurys, driven stock prices lower and raised corporate borrowing costs. Powell and other Fed policymakers have said they think those trends may contribute to an economic slowdown — and, in process, ease inflation pressures — without the need for further rate hikes.

Since March 2022, the Fed has raised its key rate from near zero to roughly 5.4% in its effort to tame inflation, which reached a four-decade high as the economy roared out of the pandemic recession in 2020. The costs of mortgages, auto loans and credit card debt have all risen in response. Annual inflation, as measured by the government's consumer price index, has sunk from a 9.1% peak in June of last year to 3.7%.

Economists at Wall Street banks have estimated that sharp losses in the stock and bond markets over the