U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at Federal Reserve headquarters, July 27, 2022 in Washington, DC.
Drew Angerer | Getty
The Federal Reserve will raise interest rates as high as 4.6% in 2023 before the central bank halts its battle against soaring inflation, according to a median forecast released on Wednesday.
Fed on Wednesday benchmark interest rate hike added 3/4 percentage points to the 3%-3.25% range, the highest level since early 2008.
The median forecast also shows central bank officials are expected to raise interest rates to 4.4% by the end of 2022. With just two policy meetings left in the calendar year, the central bank is most likely The central bank could conduct another 75 basis point rate hike before the end of the year.
The so-called dot plot, which the Fed uses to signal the outlook on the path of interest rates, shows that 6 of the 19 “dots” will see interest rates even higher, up to 4.75% – 5% next year.
Here are the Fed’s latest goals:
A series of large interest rate hikes is expected to slow down the economy. The Fed’s summary of economic projections shows the unemployment rate is estimated to rise to 4.4% next year from 3.7% currently. Meanwhile, GDP growth is forecast to slow to just 0.2% in 2022.
With the tightening tightening, headline inflation, as measured by the Fed’s preferred personal consumption expenditures price index, is expected to fall to 5.4% this year. The index stood at 6.3% in August. Fed officials expect inflation to eventually fall back to the Fed’s 2% target by 2025.