Fed rate hike

The central bank is expected to raise rates by three-quarters of a percentage point for the third consecutive time.

[misjudging inflation](https://www.washingtonpost.com/us-policy/2022/05/31/inflation-economy-timeline/?itid=lk_inline_manual_15) for much of last year, the Fed has been in a race to push past the “neutral” zone of roughly 2.5 percent, where rates don’t slow or juice the economy, and into “restrictive territory” that dampens consumer demand and gets inflation down. Fed officials had hoped that the latest consumer price index report would show a meaningful drop in inflation, thanks in part to falling gas prices. Policymakers are also set to release a new set of economic projections. He is likely to get questions on inflation, the risks of a recession, future rate hikes — and what the toll of those moves will be. [job market](https://www.washingtonpost.com/business/2022/09/02/august-jobs-report/?itid=lk_inline_manual_7) and consumer spending — two crucial economic engines — have stayed resilient through the Fed’s sharp rate hikes, and Americans may even be [feeling better](https://www.washingtonpost.com/business/2022/09/10/economy-inflation-gas-prices/?itid=lk_inline_manual_7) about inflation. “If it’s [one percentage point], I think that would be interpreted as a statement,” said Justin Wolfers, professor of public policy and economics at the University of Michigan.

The Federal Reserve is expected to deliver a third straight supersize interest rate increase at 2 p.m. on Wednesday as it tries to wrestle stubborn inflation ...

If they show a bigger down-drift this time, it will be a signal that they think a more aggressive hit to the economy will be needed to wrestle inflation lower. In June, for instance, officials didn’t see it happening through 2024, signaling that the path toward more subdued inflation is likely to be a long one. In the Fed’s last set of projections, officials saw unemployment rising to 4.1 percent in 2024. Powell, the Fed chair, has already acknowledged that the adjustment process is likely to bring “pain” to businesses and households. But once the job market slows, joblessness begins to rise and wage growth moderates — a series of events officials think is necessary to get back to slow and steady price gains — the really difficult phase of the Fed’s maneuvering will begin. In June, half of officials expected rates to peak between 3.75 and 4 percent or higher at the end of 2023. But investors expect that the central bank could project an even higher rate by the end of the year — so they will also be parsing the Fed’s first set of economic projections since June for a sense of what comes next. The White House will be paying close attention to the Fed’s outlook for future interest rate increases. Car loans are also expected to climb, but those increases continue to be overshadowed by the rising cost of buying a vehicle and the price you pay for filling it with gas. Investors will parse the economic projections to better understand where the Fed is headed, and will then tune in to watch Jerome H. With fewer consumers and companies competing for the available supply of goods and services, price gains are able to moderate. Central bankers have already raised interest rates considerably in an attempt to slow the economy and temper price increases.

The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point for the third consecutive time in an aggressive move to ...

They also provide some proof that the Fed is willing to accept "pain" in economic conditions in order to bring down persistent inflation. The rate was also revised higher for 2024 to 3.9% from 3.4% in June and is expected to remain elevated at 2.9% in 2025. The median federal funds rate projection was revised upwards for 2022 to 4.4% from 3.4% in June. The numbers released on Wednesday showed that the Federal Reserve expects interest rates to remain elevated for years to come. Core Personal Consumption Expenditures, the Fed's favored measure of rising prices, is projected to hit 4.5% this year and 3.1% in 2023, the Fed's SEP showed. The supersized hike, which was unfathomable by markets just months ago, takes the central bank's benchmark lending rate to a new target range of 3%-3.25%.

The Federal Reserve concluded its two-day meeting Wednesday, with markets widely expecting a 0.75 percentage point interest rate increase.

September marked the beginning of full-speed "quantitative tightening," as it is known in markets, with up to $95 billion a month in proceeds from maturing bonds being allowed to roll off the Fed's $8.9 trillion balance sheet. "The Fed is not anywhere close to a pause or a pivot. The moves come amid stubbornly high inflation that Powell and his colleagues spent much of last year dismissing as "transitory." It also repeated that "ongoing increases in the target rate will be appropriate." The Fed targets its fund rate in quarter-point ranges. Six of the 19 "dots" were in favor of taking rates to a 4.75%-5% range next year, but the central tendency was to 4.6%, which would put rates in the 4.5%-4.75% area. Along with that, they see GDP growth slowing to 0.2% for 2022, rising slightly in the following years to a longer-term rate of just 1.8%. The only comparison was in 1994, when the Fed hiked a total of 2.25 percentage points; it would begin cutting rates by July of the following year. The summary of economic projections then sees inflation falling back to the Fed's 2% goal by 2025. Powell and his colleagues have emphasized in recent weeks that it is unlikely rate cuts will happen next year, as the market had been pricing. The market swung as Fed Chairman [Jerome Powell](https://www.cnbc.com/jay-powell/) discussed the outlook for interest rates and the economy. "My main message has not changed since Jackson Hole," Powell said in his post-meeting news conference, referring to his policy speech at the Fed's annual symposium in August.