Tough Talk by Chairman Powell Signaling More Rate Hikes Over a Longer Time Span

FOMC Gathering

The Fed's decision to increase its benchmark rate by 50 basis points was announced as predicted. The "Fed funds" rate of the central bank now ranges from 425 to 450 basis points (4 14% to 4 12%); But at the press conference, Chairman Powell's remarks on his policy outlook caught the most attention.

Market investors and analysts were seeking information on the Federal Reserve's forward guidance with regard to its monetary policy, inflation, and upcoming rate rises. It demonstrated that the Federal Reserve will keep raising rates in 2023 as part of its monetary tightening stance.

Following today's FOMC meeting, the Federal Reserve issued a statement and a summary of its economic forecasts for 2023 through 2025. They included the most recent "dot plot," which shows the evaluations made by each Fed official, in their economic estimates. There will be 19 distinct forecasts in the dot plot when the Fed is fully staffed.

2023 - Higher interest rates were projected in 2023 by each of the 19 members of the Federal Reserve who contributed their "dots." The majority of members (10 votes) predict rates will be at 5 14%, while four members predict rates will drop to 5 12%, two members predict rates will be at 5 34%, and two members predict rates will be at 4 34%.

Seven members predict that interest rates will stay above the present level of 4 12% in 2024, while the remaining 12 members predict that rates will decrease from 14% to 1 12%.

Fed funds rates are expected to range between 4 12% and 3% by the end of 2025, according to all members of the Federal Reserve.

Chairman Powell reinforced the data in their economic prognosis and the Fed's policy outlook with a strong message, stating that "Fed policymaker predictions are the best estimate of where Fed policy rates will be."