The Fed began in March 2022 to raise its interest rate by 75 basis points to try to contain inflation that was at its highest levels in almost four decades.
In its statement, the entity led by Jerome Powell estimates that the federal funds target will rise to 5.1% in 2023, a figure slightly higher than what investors expected before the two-day monetary policy meeting this week.
Only two of the 19 Fed officials saw the benchmark overnight interest rate below 5% next year, a sign they still feel the need to battle inflation that has been at 40-year highs.
“The (Federal Open Market) Committee is very attentive to inflation risks (…) Continued increases in the target range will be appropriate to achieve a sufficiently restrictive monetary policy stance to return inflation to 2% with time,” the Fed said.
The unanimously approved new statement was released after a meeting in which officials pared rate hikes by three-quarters of a percentage point from the past four meetings.
The average unemployment rate is projected to rise to 4.6% over the next year from 3.7% currently, an increase that exceeds the level historically associated with a recession
Gross domestic product will grow just 0.5% next year, the same as in 2022, before rising to 1.6% in 2024 and 1.8% in 2025, a level seen as the economy’s long-term potential.
