Wednesday, October 5, 2022
Home LATEST NEWS Fed officials expect to keep raising rates through 2023: Quartz

Fed officials expect to keep raising rates through 2023: Quartz

The US Federal Reserve raised interest rates by another 75 basis points on Wednesday, with officials forecasting a sizeable economic slowdown in 2022.

That puts the fed funds rate, or the rate at which the Fed lends to banks, at 3.25%, up from 2.5% previously.

“Reducing inflation will likely require a sustained period of below-trend growth,” Federal Reserve Chairman Jerome Powell said. “We’ll keep doing it until we’re sure the job is done.”

The Fed’s latest quarterly economic forecast, also released on Wednesday, shows a decidedly less optimistic view of the central bank’s ability to rein in inflation. Officials don’t expect to see their favorite measure of inflation, the personal consumption expenditures index, anywhere near the Fed’s 2% target through 2024.

So while three months ago officials predicted interest rates would be at 3.4% by the end of 2022, they now see the Fed raising them to 4.4%, according to the summary of economic projections, which compiles the views of the Fed’s board of governors.

They also do not see the Fed backtracking on interest rate hikes in 2023 as they had forecast in June. The median opinion of Fed officials is that the Fed funds rate will be 4.6% by the end of next year and then 3.9% by the end of 2024.

Fed Officials Cut Their 2022 GDP Forecast

Fed officials also lowered their outlook for economic growth for 2022 in the face of declining output, global shortages and monetary tightening. They now see the US economy growing 0.2% this year, down from the 1.7% they forecast in June.

The Fed sees a resilient job market

Fed officials take a less gloomy view of the labor market, predicting that the unemployment rate, currently 3.7%, will rise to 3.8% by the end of the year and 4.4% by the end of next year.

But some are skeptical about the Fed’s projections, given the pace of expected increases in interest rates. “An unemployment rate that rises from 3.5% to 4.4% is not an unemployment rate that peaks at 4.4%,” wrote Skanda Amarnath, CEO of Employ America. “Everyone should assume that the Fed is committed to engineering a recession.”


RELATED ARTICLES

US, Philippine Forces Conduct Combat Exercises to Prepare for Crisis

Manila, Philippines -- More than 2,500 U.S. and Filipino marines joined combat exercises Monday to respond to any sudden crises in a region on...

Bidens to view hurricane damage in Florida, Puerto Rico: CBS News Flash Oct. 3, 2022

Bidens to view hurricane damage in Florida, Puerto Rico: CBS News Flash Oct. 3, 2022 - CBS News ...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

The Onion files an amicus curiae brief with the Supreme Court defending parody

The Onion, a satirical publication known for poking fun at everything from popular culture to global politics, is trying to solve a serious problem....

What is COVID psychosis? The case of a teenager sheds light on a rare side effect.

COVID is known to affect the brain, causing a variety of symptoms and problems, including loss of smell and taste,...

Your child’s short attention span is actually helping him learn

Photo: family field (Shutterstock)A the child's short attention span can be something to behold. One moment...