Fed policymakers see higher U.S. interest rates for longer
The Hindu
U.S. central bankers see the policy rate, now in the 4.25%-4.5% range after Wednesday's 50-basis-point increase, rising to 5.1% by the end of next year
Federal Reserve policymakers expect to raise U.S. interest rates further, and keep them high for longer, than they had earlier anticipated, signaling Wednesday that squashing high inflation will likely take a bigger toll on the economy and the job market than they had hoped.
And though Fed Chair Jerome Powell said that the Fed's latest policymaker projections don't necessarily mean the economy will fall into a recession, he did suggest the risk is worth it, and that the Fed has no plans to cut rates to cushion the blow.
"Reducing inflation is likely to require a sustained period of below-trend growth and some softening of labor conditions," Powell said.
U.S. central bankers see the policy rate, now in the 4.25%-4.5% range after Wednesday's 50-basis-point increase, rising to 5.1% by the end of next year, according to the median estimate in the Fed's quarterly summary of economic projections published at the end of its two-day meeting.
That is a half percentage point higher than they forecast in September.
The rate is then seen dropping to 4.1% in 2024, the projections show, again higher than estimated just three months ago.
There was broad disagreement among central bankers about that decline, with seven of the 19 policymakers expecting the rate not to drop as fast, and five seeing a steeper decline.
