The Federal Reserve raised its key interest rate Wednesday for the 11th time in 17 months, a streak of hikes that are intended to curb inflation but that also carry the risk of going too far and triggering a recession. The move lifted the Fed’s benchmark short-term rate from roughly 5.1% to …

WASHINGTON β€” The Federal Reserve raised its key interest rate Wednesday for the 11th time in 17 months, a streak of hikes intended to curb inflation but that also carry the risk of going too far and triggering a recession.

The move lifted the Fed’s benchmark short-term rate from roughly 5.1% to 5.3% β€” its highest level since 2001. Coming on top of its previous rate hikes, the Fed’s latest move could lead to further increases in the costs of mortgages, auto loans, credit cards and business borrowing.

Though inflation eased to its slowest pace in two years, Wednesday’s hike reflects the concern of Fed officials that the economy is still growing too fast for inflation to fall back to their 2% target.

With consumer confidence reaching its highest level in two years, Americans keep spending β€” crowding airplanes, traveling overseas and flocking to concerts and movie theaters. Most crucially, businesses keep hiring.

In a statement, the Fed said the economy β€œhas been expanding at a moderate pace,” a slight upgrade from its assessment in June.

Speaking at a news conference, Chair Jerome Powell revealed that the Fed’s staff economists no longer foresee a recession. In April, the minutes of the central bank’s March meeting revealed that the staff economists envisioned a β€œmild” recession later this year.

β€œGiven the resilience of the economy recently,” he said, β€œthey are no longer forecasting a recession.”

Federal Reserve Chair Jerome Powell speaks Wednesday during a news conference at the William McChesney Martin Jr. Federal Reserve Board Building in Washington.

Meanwhile, the Congressional Budget Office reported Wednesday that economic and job growth so far this year has been stronger than forecast in February, but an updated outlook sees parts of the economy as weakening through 2024.

The latest 10-year budget and economic outlook from the nonpartisan office shows how difficult it is to figure out where the United States is going in the wake of the COVID-19 pandemic.

The CBO said it expects interest rates to continue to rise, as well as slower growth in the gross domestic product for the rest of this year and unemployment reaching 4.7% by the end of 2024.

A key question swirling around the Fed is whether Wednesday’s increase will be its last or whether it will hike again later this year.

At his news conference, Powell said the central bank made no decisions about any future rate increases but made it clear the fight against inflation isn’t over. β€œThe process of getting inflation down to 2% has a long way to go,” he said.

He stressed that the Fed’s policymakers will assess a range of incoming economic data in determining what action, if any, to take at their next meeting. When the officials last met in June, they signaled they expected to raise rates twice more. By the time they meet again Sept. 19-20, Powell noted, they will have much more data in hand: Two more inflation reports, two reports on hiring and unemployment and updated figures on consumer spending and wages.

Some economists think the Fed might decide to forgo a rate increase in September before weighing a possible hike at its meeting in November.

Fed chairman Jerome Powell’s news conference is displayed Wednesday at the New York Stock Exchange.

In recent weeks, several Fed officials said they worry that the still-brisk pace of job growth will lead workers to demand higher pay to make up for two years of inflationary prices. Sharp wage gains can perpetuate inflation if companies respond by raising prices for their customers.

At the same time, the steady easing of inflation pressures lifted hopes that the Fed can pull off a difficult β€œsoft landing,” in which its rate hikes would continue to cool inflation without sending the economy tumbling into a recession.

Powell lent support to that possibility in his remarks Wednesday, saying, β€œWe do have a shot at a soft landing.”

He held open the prospect that the Fed will β€œbe able to achieve inflation moving back down to our target without the kind of really significant downturn that results in high levels of job losses that we’ve seen in the past.”

Durable consumer spending has been a key driver of growth. Many Americans still have savings stemming from the pandemic, when the government distributed stimulus checks and people saved by spending less on travel, restaurants and entertainment.

Hiring has remained healthy, with employers having added 209,000 jobs in June and the jobless rate reaching an ultra-low 3.6%. That’s about where it was when the Fed began raising rates in March 2022 β€” a sign of economic resilience that almost no one had foreseen.

Year-over-year inflation in June was 3%, according to the government, down sharply from a peak of 9.1% in June 2022. One cautionary note, though, is that a β€œcore” inflation measure preferred by the Fed, which excludes volatile food and energy costs, was still up 4.6% in May from a year earlier.

Some analysts caution that the drop in year-over-year inflation from roughly 9% to 3% was the relatively easy part, Getting it down to the Fed’s 2% target will be harder and take longer.

Other experts say they think the recent mild inflation readings can be sustained. Rental cost increases, which have already fallen, should drop further as more apartment buildings are completed.

Though the Fed began tightening credit before central banks in many other developed countries did, most others are now following suit.

Subscribe to stay connected to Tucson. A subscription helps you access more of the local stories that keep you connected to the community.