United States Federal Reserve's Federal Open Market Committee (FOMC) shared on Wednesday that it will increase the target range for the federal funds rate by three-quarters of a percentage point to between 3% and 3.25%, marking this the third consecutive hike of such intensity this year, with the rate hitting its highest point since January 2008.
Fed reiterated that inflation "remains elevated," stating that it "anticipates that ongoing increases in the target range will be appropriate." The 75 basis point hike decision was made "unanimously."
The Fed's new economic projections revealed that its main interest rate will reach 4.4% at the end of the year, up 1 percentage point compared to the June forecast. The 2022 GDP prospects were revised down by 1.5 percentage points to 0.2%. The unemployment rate projection was revised up by 0.1 percentage points to 3.8%. Meanwhile, 2022 PCE inflation estimate is now 5.4%, up 0.2 percentage points from the previous forecast and core PCE inflation is expected to hit 4.5%, compared to June’s figure of 4.3%.
