THE US Federal Reserve all but said this past week that it is going to pause its rapid tightening of monetary policy.

On May 3, the Fed said the target for the federal funds rate would be raised by another 25 basis points – to between 5 per cent and 5.25 per cent – and that the Federal Open Market Committee (FOMC) will consider a range of factors in determining the extent to which additional policy firming may be appropriate to return inflation to its long-term target of 2 per cent.

This was a marked shift from the Fed’s rate-hike announcements over the past year, each of which telegraphed that further increases in the federal funds rate were on the cards.