The Fed announced an interest rate hike of 50 basis points and thus met the forecasts of analysts who expected the Federal Reserve to start a recession in rate hikes.
The Fed also cut its growth forecast for 2023 to 0.5% from 1.2% and raised its inflation forecast for 2023, bringing its rates above 5%.
Under the Federal Reserve’s preferred measure, inflation would remain above the 2% target through at least the end of 2025, and above 3% through the end of next year.
The average unemployment rate is projected to rise from 3.7% to 4.6% next year, an increase that is higher than the level historically associated with recessions.
The Fed said, “The (Federal Open Market) Committee is very mindful of inflation risks (…) A continued increase in the target range is appropriate to achieve a sufficiently accommodative monetary policy stance to bring inflation back to 2% over time.” Will be.” An almost identical statement at its November meeting.
The unanimously approved new statement was issued after a meeting in which officials cut rates by three-quarters of a percent in the last four meetings.
The Fed’s key interest rate, which started the year near zero, is now in a target range of 4.25% to 4.50%, the highest since 2007.
Federal Reserve Chairman Jerome Powell is scheduled to hold a press conference to reveal more details about the monetary policy meeting, the last of 2022.
The new rate outlook, a rough estimate of where officials think they could pause in their current rate hike cycle, was released alongside economic projections showing a long battle with inflation yet to come. , and with conditions approaching recession throughout the year.
Source: Scope
