Federal Reserve Chair Jerome Powell delivers a news briefing after the central bank raised its key interest rate by three-quarters of a point — the largest hike since 1994.
The move the Fed announced after its latest policy meeting will raise its benchmark short-term rate, which affects many consumer and business loans, to a range of 1.5% to 1.75%. With the additional rate hikes they foresee, the policymakers expect their key rate to reach a range of 3.25% to 3.5% by year’s end — the highest level since 2008 — meaning that most forms of borrowing will become sharply more expensive.having reached a four-decade high of 8.
Even if a recession can be avoided, economists say it’s almost inevitable that the Fed will have to inflict some pain — most likely in the form of higher unemployment — as the price of defeating chronically high inflation. Over the next two years, the officials are forecasting a much weaker economy than was envisioned in March. They expect the unemployment rate to reach 3.7% by year’s end and 3.9% by the end of 2023. Those are only slight increases from the current 3.6% jobless rate. But they mark the first time since it began raising rates that the Fed has acknowledged that its actions will weaken the economy.
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