The Fed raised interest rates by 3 yards as expected, with next year’s final rate expected to rise to 4.6% | Anue Juheng-US Stocks

The Federal Reserve (Fed) concluded its September interest rate decision meeting on Wednesday (21st) and raised its benchmark interest rate by 3 yards to a range of 3.0% to 3.25% to the highest level since before the 2008 financial crisis.

The Federal Reserve on Wednesday announced a 3-yard rate hike, maintaining the biggest single rate increase since 1994. At the same time, the Fed raised the interest rate on excess reserves (IOER) by 3 yards to 3.15% from 2.4% previous

The Fed said in its latest statement that FOMC members expect continued interest rate increases to be appropriate, with a strong commitment to bring inflation back to its 2% target.

According to the newly released interest rate points chart, most voting members agreed to raise the benchmark interest rate to above 4.25% this year, indicating that November could raise interest rates for the fourth time in a row by 3 yards . The Fed expects this cycle of rate hikes to peak next year, and revised the median terminal rate forecast up to 4.6%, which is higher than the market’s previous forecast of 4.5%.

The median forecast for the benchmark rate puts it at 4.4% by the end of 2022, 4.6% in 2023 and 3.9% in 2024 (Image: FOMC)

The Fed also updated the economic outlook, with officials unanimously predicting that US gross domestic product (GDP) growth will slow sharply to 0.2% in 2022, well below the 1.7% forecast in June, while GDP growth in 2023 and 2024 slows sharply to 0.2% Rate forecasts revised down to 1.2% and 1.7%, respectively.

At the same time, with the Fed aggressively raising interest rates, the Fed will estimate the unemployment rate to 4.4% next year from the current 3.7%, and reduce the general personal consumption expenditure price index forecast ( SNP) for this year to 5.4%. . Core inflation, which excludes food and energy, was revised down to 4.5% this year, and headline inflation is not expected to fall back to the Fed’s 2% target eventually in 2025.

After the Fed released the latest monetary policy decision, US stocks fell on Wednesday, the Dow Jones pared earlier gains, the 2-year and 10-year US Treasury yield curve flattened, and the 2-year US Treasury yield rate since 2007. 4.1% for the first time since then.

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