×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: federal reserve | interest rates | inflation | recession | u.s. economy

Fed Hikes Rates, Signals Aggressive Turn Against Inflation

Powell
Federal Reserve Chairman Jerome Powell (Getty Images)

Wednesday, 16 March 2022 02:04 PM EDT

The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point (25 basis points) and projected its policy rate would hit a range between 1.75% and 2% by year's end in a newly aggressive stance against inflation that will push borrowing costs to restrictive levels in 2023.

In a new policy statement marking the end of its full-on battle against the coronavirus pandemic, the U.S. central bank flagged the massive uncertainty the economy faces from the war in Ukraine and the ongoing health crisis, but still said "ongoing increases" in the target federal funds rate "will be appropriate" to curb the highest inflation in 40 years.

The statement dropped direct reference to the coronavirus pandemic but instead cited the war in Ukraine as creating "additional upward pressure on inflation" and weighing on economic activity.

The interest rate path shown in new projections by policymakers is tougher than expected, reflecting Fed concern about inflation that has moved faster and threatened to become more persistent than expected, and put at risk the central bank's hope for an easy shift out of the emergency policies put in place to fight the fallout from the pandemic.

Even with the tougher rate increases now projected, inflation is expected to remain above the Fed’s 2% target, remaining at 4.1% through this year and dropping only to 2.3% through 2024. Economic growth is seen at 2.8% this year, a sharp drop from the 4.0% growth projected in December.

The unemployment rate is seen dropping to 3.5% this year and remaining there next year, but is projected to rise slightly to 3.6% in 2024.

The new statement said the Fed expects to begin reducing its nearly $9 trillion balance sheet "at a coming meeting," a topic likely to be addressed further by Fed Chair Jerome Powell in a news conference due to begin at 2:30 p.m. EDT (1830 GMT).

St. Louis Fed President James Bullard was the only policymaker to dissent in the Fed's decision.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point (25 basis points) and projected its policy rate would hit a range between 1.75% and 2% by year's end in a newly aggressive stance against inflation.
federal reserve, interest rates, inflation, recession, u.s. economy
331
2022-04-16
Wednesday, 16 March 2022 02:04 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved