Fed raises interest rate by 50bps to 4.25-4.50% as widely expected. The decision was unanimous.
Tightening bias is maintained as “the Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time”.
In the new median economic projections:
- Federal funds rate is projected to hit 5.1% in 2023, then falls back to 4.1% in 2024, and then 3.1% in 2015.
- Real GDP growth was revised down from 1.2% to 0.5% in 2023, from 1.7% to 1.6% in 2024, and unchanged at 1.8% in 2025.
- Unemployment rate was revised up from 4.4% to 4.6% in 2023, from 4.4^ to 4.6% in 2024, and from 4.3% to 4.5% in 2025.
- PCE inflation was revised up from 2.8% to 3.1% in 2023, 2.3% to 2.5% in 2024, a and from 2.0% to 2.1% in 2025.
- Core PCE inflation was revised up from 3.1% to 3.5% in 2023, 2.3% to 2.5% in 2024 and unchanged at 2.1% in 2025.
In the “dot plot”
- 17 policy makers expect interest rate to climb to 5.125% and above in 2023, with 7 expects 5.375% and above.
- 12 policy makers expect interest to fall back to 4.125% in 2024 and below.
