Federal Reserve System raises rates by 50 bps, sees economy nearing stall speed
- ByStartupStory | December 15, 2022
The Fed raises interest rates by half a percentage point and projects at least an additional 75 basis points of increases in borrowing costs by the end of 2023. Also they are expecting a rise in unemployment and a near stalling of economic growth by this. The U.S. central bank’s projection of the target federal funds rate rising to 5.1% in 2023. It is seen to be higher than investors expected heading into the two-day policy meeting of this day and appeared biassed if anything to move higher.
“The (Federal Open Market) Committee is highly attentive to inflation risks … Ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” said by Fed. “Taken together, today’s statement and economic projections tell a simple, but persuasive story: this Fed isn’t prepared to ‘pivot’ in any meaningful way until it sees sustained and conclusive evidence of a reversal in inflationary pressures,” said chief market strategist of Corpay, Karl Schamotta.
The fresh federal funds rate outlook, a rough estimate of where central bank officials feel they can pause their current hiking cycle, shows a competence with inflation still to come and with near recessionary conditions developing in this year. It was issued along with economic projections.
The Federal Reserve System is the central banking system of the United States of America that was founded in 1913 according to the Federal Reserve Act. This came out as a result of financial panics of 1907 that led to the desire for central control of the monetary system in order to alleviate financial crises.
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