Fed Lifts Rates by Half Percentage Point, Sees Economy Nearing Stall Speed



The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth.

The U.S. central bank’s projection of the target federal funds rate rising to 5.1% in 2023 is slightly higher than investors expected heading into this week’s two-day policy meeting and appeared biased if anything to move higher.

Only two of 19 Fed officials saw the benchmark overnight interest rate staying below 5% next year, a signal they still feel the need to lean into their battle against inflation that has been running at 40-year highs.

“The (Federal Open Market) Committee is highly attentive to inflation risks … 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 said in a statement nearly identical to the one it issued at its November meeting.

The new statement, approved unanimously, was released after a meeting at which officials scaled back from the three-quarters-of-a-percentage-point rate increases that were delivered at the last four gatherings. The Fed’s policy rate, which began the year at the near-zero level, is now in a target range of 4.25% to 4.50%, the highest since late 2007.

Fed Chair Jerome Powell is scheduled to hold a news conference at 2:30 p.m. EST (1930 GMT) to provide further details on the policy meeting, which was the last of 2022.

The new rate outlook, a rough estimate of where officials feel they can pause their current rate-hike cycle, was issued along with economic projections showing an extended battle with inflation still to come, and with near recessionary conditions developing over the year.

Inflation, based on the Fed’s preferred measure, is seen remaining above the central bank’s 2% target at least until the end of 2025, and will still be above 3% by the end of next year.

The median projected unemployment rate is seen rising to 4.6% over the next year from the current 3.7%, an increase that exceeds the level historically associated with a recession.

Gross domestic product is seen growing by just 0.5% next year, the same as estimated for 2022, before rising to 1.6% in 2024 and 1.8% in 2025, a level considered to be the economy’s long-run potential.



Source link

Leave a Reply

Your email address will not be published.

Previous post France 1-0 Morocco – World Cup 2022: Live score, team news and updates in semi-final
Next post Majority of Britons would support banning sale of cigarettes or tobacco to anyone born after 2008
How Miles Teller Totally Broke Royal Protocol Meeting Prince William and Kate Middleton Mila Kunis Reveals Why She and Ashton Kutcher Don’t Close Bathroom Doors at Home With Kids Khloe Kardashian and Tristan Thompson Were Engaged for 9 Months Before Paternity Lawsuit Selena Gomez Speaks Out About Kindness After Hailey Bieber’s Tell All Interview Shane Warne’s child, Jackson, shares recordings of ‘harmful ladies despising’ powerhouse Andrew Tate: ‘I really do concur with a couple of the things he says’ Kate and William to greet Americans ‘sleeping on the streets’ amid US visit ‘He said “take your bra off”… I was 15’: Supermodel Kate Moss reveals in unflinching detail how she fled a photoshoot in tears after being targeted by fashion industry predator as a teenager How to get early access to the MultiVersus open beta – usnewspress Gunman kills 3 people in Indiana mall shooting, police say Top 10 sizzling sex secrets to Spice Up Your Sex Life Stellantis Announces Termination of Jeep Venture With China’s GAC Memphis police thwart potential mass shooting at arena: Officials 4 dead after argument between 2 groups leads to shooting at north Harris County apartment complex, sheriff says US soprano, offended by blackface, pulls out of Italy opera 10 Top Romantic Getaways in New Jersey Ricky Martin’s Attorney Says Allegations of a Sexual Relationship with His Nephew Are ‘Untrue’ 8 Best Semiconductor Stocks To Buy Amid a Global Chip Shortage : USA Le’Veon Bell Reflects on Lost Season With Steelers in Retirement Post Updates on Tiger Woods from Round 1 of The Open PETE ALONSOI’M DEALING W/ ‘PRETTY BAD PTSD’… Over March Car Crash