(Bloomberg) — Federal Reserve officials raised interest rates by 75 basis points for the third consecutive time and forecast they would reach 4.6% in 2023, stepping up their fight to curb inflation that’s persisted near the highest levels since the 1980s.
Most Read from Bloomberg
In a statement Wednesday following a two-day meeting in Washington, the Federal Open Market Committee repeated that it “is highly attentive to inflation risks.” The central bank also reiterated it “anticipates that ongoing increases in the target range will be appropriate,” and “is strongly committed to returning inflation to its 2% objective.”
Chair Jerome Powell will hold a press conference at 2:30 p.m.
The decision, which was unanimous, takes the target range for the benchmark federal funds rate to 3% to 3.25% — the highest level since before the 2008 financial crisis, and up from near zero at the start of this year.
For Bloomberg’s TOPLive blog on the Fed decision and press conference, click here
Officials expect the benchmark rate to rise to 4.4% by year end and 4.6% during 2023, according to the median estimate in updated quarterly projections published alongside the statement. That indicates a fourth-straight 75 basis-point hike could be on the table for the next gathering in November, about a week before the midterm elections.
Further ahead, rates were seen stepping down to 3.9% in 2024 and 2.9% in 2025.
The projections, which showed a steeper rate path than officials laid out in June, underscore the Fed’s resolve to cool inflation despite the risk that surging borrowing costs could tip the US into recession.
Before the release, traders expected rates to reach 4.5% in early 2023 before falling about a half point by the end of the year.
Powell and his colleagues, slammed for a slow initial response to escalating price pressures, have pivoted aggressively to catch up and are now delivering the most aggressive policy tightening since the Fed under Paul Volcker four decades ago.
The updated forecasts also showed unemployment rising to 4.4% by the end of next year and the same at the end of 2024 — up from 3.9% and 4.1%, respectively, in the June projections.
Estimates for economic growth in 2023 were marked down to 1.2% and 1.7% in 2024, reflecting a bigger impact from tighter monetary policy.
Read more: The Global Race to Hike Rates Tilts Economies Toward Recession
Inflation peaked at 9.1% in June, as measured by the 12-month change in the US consumer price index. But it’s failed to come down as quickly in recent months as Fed officials had hoped: In August, it was still 8.3%.
Job growth, meanwhile, has remained robust and the unemployment rate, at 3.7%, is still below levels most Fed officials consider to be sustainable in the longer run.
The failure of the labor market to soften has added to the impetus for a more-aggressive tightening path at the US central bank.
Fed action is also taking place against the backdrop of tightening by other central banks to confront price pressures which have spiked around the globe. Collectively, about 90 have raised interest rates this year, and half of them have hiked by at least 75 basis points in one shot.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
In this article, we discuss the 10 Chinese stocks to avoid amid economic slowdown. If you want to read about some Chinese stocks, go directly to 5 Chinese Stocks to Avoid Amid Economic Slowdown. Investors around the world have been impacted from the prolonged COVID-19 policies of the Chinese government that have slowed down growth […]
Earlier this year, markets were complacent as Russia massed troops on the Ukraine border. Now, they’re once again largely shrugging off Vladimir Putin’s signal that he could be prepared to use nuclear weapons. World shares weathered an early knock to risk appetite on Wednesday after Putin mobilised more troops for Ukraine and threatened to use all of Russia’s arsenal against what he called the West’s “nuclear blackmail” over the war there.
In this article, we discuss the 10 stocks that Cathie Wood is buying on the dip. If you want to read about some more stocks in the Wood portfolio, go directly to Cathie Wood is Buying These 5 Stocks on the Dip. The technology-heavy NASDAQ Composite has taken a severe beating in the past few […]
In this piece, we will take a look at the ten stocks to sell now according to Orkun Kilic’s Berry Street Capital. If you want to skip our introduction of the hedge fund and jump ahead to the top five stocks in this list, then head on over to 5 Stocks to Sell Now According […]
There are currently plenty of publicly traded companies to choose from that fit the bill. Roku’s stock is down by nearly 70% this year as the streaming company has faced multiple problems, some of which are related to macroeconomic headwinds. Roku makes much of its revenue through advertisements on its platform, and spending on ads has decreased as businesses deal with inflation, lower customer spending, and other issues.
U.S. telecommunications company AT&T (NYSE: T) has had an eventful year. It shed its entertainment assets to become a pure telecom business and reduced its dividend to help right the financial ship. Anyone who’s owned AT&T or looked into the stock is probably aware of its disastrous decade throughout the 2010s.
QuantumScape (NYSE: QS) shares are significantly outperforming other technology stocks to the downside today. While the tech-heavy Nasdaq Composite index was down about 1.3% as of 2:45 p.m. ET, QuantumScape stock was lower by 6%. If successfully commercialized, solid-state battery technology should provide faster charging times with a more efficient and safer battery.
In this article, we will be taking a look at the 10 risky stocks to buy today in line with the expectation of a soft landing. If you want to skip our discussion on the economic stance of JPMorgan’s strategists, you can go directly to 5 Risky Stocks to Buy Today. Marko Kolanovic, a global […]
Futures tied to Wall Street’s fear gauge are close to sending a signal of growing fear that has sometimes preceded past stock market rebounds. With investors awaiting a consequential Federal Reserve announcement on Wednesday afternoon, October VIX futures were trading only 0.20 points lower than November futures, the slimmest margin since mid-June, when the S&P 500 marked a bottom. VIX futures, which plot volatility expectations for several months ahead, normally remain upward sloping, with near-term futures relatively less pricey than those that target coming months.
Glaxo (GSK) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock’s prospects.
Investors weren’t happy with the large write-down the marijuana company took, but there was some good news in its quarterly report.
One thing that tends to work in the long run is buying shares of high-quality companies that pay solid, reliable dividends. While the stock market could continue to suffer, it looks like a great time to pick up some shares of AT&T (NYSE: T), International Paper (NYSE: IP), and Hanesbrands (NYSE: HBI). Telecom giant AT&T is out of the media business.
Most investors probably haven’t heard of Chord Energy (NASDAQ: CHRD) yet. It’s a relative newcomer to the fossil fuel sector, having been formed in early July by the merger of Whiting Petroleum and Oasis Petroleum. It recently revealed its updated capital plan, which included a massive dividend increase and signaled the potential for further boosts in the future that have the potential to turn it into a monster dividend stock.