Fed Imposes Another 0.75& Rate Hike
The Federal Reserve raised interest rates by 0.75% on Wednesday (Thursday, Sept. 22, 2022, in Manila), delivering another big jump as it struggles to contain inflation.
Photo Insert: A meeting of the Board of Governors of the US Federal Reserve
Policymakers also predicted that they will raise borrowing costs to 4.4 percent by the end of the year — suggesting that they could make another supersize rate move, the New York Times reported.
Federal Reserve Chair Jerome Powell vowed that he and his fellow policymakers would "keep at" their battle to beat down inflation as the US central bank hiked interest rates by three-quarters of a percentage point for a third straight time, Howard Schneider and Ann Saphir reported for Reuters.
In a sobering new set of projections, the Fed foresees its policy rate rising at a faster pace and to a higher level than expected, the economy slowing to a crawl, and unemployment rising to a degree historically associated with recessions.
Powell was blunt about the "pain" to come, citing rising joblessness and singling out the housing market, a persistent source of rising consumer inflation, as being likely in need of a "correction."
Earlier on Wednesday, the National Association of Realtors (NAR) reported that US existing home sales dropped for a seventh straight month in August.
Recent inflation data has shown little to no improvement despite the Fed's aggressive tightening - it also announced 75-basis-point rate hikes in June and July - and the labor market remains robust with wages increasing as well as the Associated Press (AP) reported earlier.
The federal funds rate projected for the end of this year signals another 1.25 percentage points in rate hikes to come in the Fed's two remaining policy meetings in 2022, a level that implies another 75-basis-point increase in the offing.