The Federal Reserve raises interest rates aggressively again, and sees another significant increase this year

Written by Howard Schneider and Ann Sapphire

WASHINGTON (Reuters) – The Federal Reserve on Wednesday raised its target interest rate by three-quarters of a percentage point, to the 3.00%-3.25% range, and new forecasts suggest borrowing costs will rise to 4.40%. by the end of the year before finally peaking at 4.60% in 2023.

Meanwhile, the central bank’s quarterly forecast estimates a slowdown in GDP growth to 0.2% this year to recover to a 1.2% expansion in 2023, well below potential output.

In addition, the entity expects the unemployment rate to rise to 3.8% this year and stand at 4.4% in 2023. On the other hand, inflation will slowly return to the Fed’s target of 2% in 2025.

Interest rate cuts are not expected until 2024.

The projected federal funds rate for the end of this year indicates a credit cost increase of another 1.25 percentage points in the two remaining Fed policy meetings through 2022, a level that would imply another 75 basis points increase in the view.

The Federal Open Market Committee (FOMC) said in a statement, declaring that “the committee is strongly committed to returning inflation to its 2% target.” Tightening courses in the United States.

The committee said the Fed “expects current increases in the target range for the federal funds rate to be appropriate,” confirming its position from its previous statement in July. The updated projection points to a protracted battle by the Federal Reserve to cool the highest inflation rate since the 1980s, and one that could at least push the economy to the brink of recession.

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(Edited in Spanish by Marion Giraldo)

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