Fed Holds Line on Interest Rates but Increases Could Come in 2023
The Federal Reserve said Wednesday it would maintain the target range for the federal funds rate at 0 to 0.25%, but moved up the timeline for possible rate increases. The central bank’s latest quarterly economic projections anticipate at least one rate increase by the end of 2023, and possibly two.
In the meantime, the Fed said it’s appropriate to maintain the near-zero rate environment until labor market conditions have reached levels consistent with the Federal Open Market Committee’s assessments of maximum employment, with inflation rising to 2% and “on track to moderately exceed 2% for some time.”
Additionally, the Fed will continue increasing its holdings of Treasury securities by at least $80 billion per month and of agency MBS by at least $40 billion per month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”