Officials forecast that rates would reach 4.4% by the end of 2022 and 4.6% in the next year, a more hawkish shift in their so-called dot plot than expected. That implies a fourth-straight 75 basis-point hike could be on the table for the next gathering in November, about a week before the US midterm elections.
The Federal Reserve on Wednesday raised the key US interest rate again and signaled more hikes are coming as it battles soaring prices – an aggressive stance that has raised fears of an eventual recession.
It was the third consecutive increase of 0.75 percentage point by the Fed’s policy-setting Federal Open Market Committee (FOMC), continuing the forceful action to quell inflation that has surged to the highest in 40 years.
The increase takes the policy rate to 3.0-3.25%, and the FOMC said it “anticipates that ongoing increases… will be appropriate.” Speaking at a news conference after the Federal Reserve raised its key interest rate, Fed Chair Jerome Powell said officials were “strongly committed” to curbing inflation. Powell said policymakers see the need to lift the policy rate to a “restrictive level” and “keep it there for some time.” “We’re committed to getting inflation back down to 2%,” he added.
Officials forecast that rates would reach 4.4% by the end of 2022 and 4.6% in the next year, a more hawkish shift in their so-called dot plot than expected. That implies a fourth-straight 75 basis-point hike could be on the table for the next gathering in November, about a week before the US midterm elections.
Takeaways from the Fed’s interest-rate decision and economic projections.
Fed raises its main rate by 75 basis points, as anticipated, to a range of 3% to 3.25%, while new projections from officials show a median estimate of 4.4% at the end of 2022 and 4.6% at the end of 2023.
While today’s decision was unanimous, the dot plot shows a 10-9 majority in favor of hiking above 4.25% this year, suggesting a fourth straight 75 basis-point increase in November is possible
Policymakers expect rates will be cut in 2024, to about 3.9%, and to 2.9% in 2025.
