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Fed Enacts Another 75-Point Rate Hike
In a widely expected move, the Federal Reserve’s Federal Open Market Committee (FOMC) on Wednesday raised the federal funds rate another 75 points to a target range of 3% to 3.25%, its highest level since early 2008.
Expect more to come: the Fed “anticipates that ongoing increases in the target range will be appropriate,” with new projections showing the rate reaching 4.4% by year’s end before topping out at 4.6% in 2023.
In its statement Wednesday, the FOMC cited an elevated rate of inflation, coupled with “modest growth in spending and production.” The Fed’s latest quarterly economic projections show year-end GDP growth at 0.2%, rising to 1.2% in 2023, well below the economy’s potential.
The U.S. unemployment rate is expected to rise to 4.4% in 2023, according to Fed projections. Meanwhile, inflation is expected to gradually decline to the Fed’s target range of 2% in 2025.
Accordingly, the Fed is projecting up to three cuts in the federal funds rate in 2024 and four more in 2025.
- ◦Financing
- ◦Policy/Gov't
