The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth. The U.S. central bank's projection of the target federal funds rate rising to 5.1% in 2023. The Fed's policy rate, which began the year at the near-zero level, is now in a target range of 4.25% to 4.50%, the highest since 2007. Inflation, is seen remaining above the central bank's 2% target at least until the end of 2025, and will still be above 3% by the end of next year. Unemployment rate is seen rising to 4.6% over the next year from the current 3.7%, an increase that exceeds the level historically associated with a recession. GDP is seen growing by just 0.5% next year, the same as estimated for 2022, before rising to 1.6% in 2024 and 1.8% in 2025, a level considered to be the economy's long-run potential. The FED is has also said it has no plans of reducing interest rates until there is more 'evidence that inflation is on a downward path', we can expect more negative economic activity in coming months.
I also wrote about this topic and found it very interesting that the Fed is so hesitant to lower interest rates. I understand not wanting to cause more inflationary pressures; however, I feel like people are already struggling with the current plan.
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