The Federal Reserve is expected to raise interest rates by half a percentage point at the end of its two-day policy meeting on Wednesday to continue its fight against inflation.
Inflation, as noted in Tuesday’s CPI report, has eased to 7.1% in the 12 months to November from a blistering 9.1% pace in June, which is giving the Fed breathing room to shrink the size of its rate hikes. However, the Fed’s still a long way from its 2% inflation goal, which means this is unlikely to be the last rate increase, economists say.
The Fed has already raised rates six times this year to a range between 3.75% and 4% from near zero at the start of the year. The last four increases were supersized at 0.75 percentage point each. With another half-point hike expected, the cumulative increase to date would rank among the most aggressive increases since the 1980s to try to tame the highest inflation in 40 years.
Along with an expected rate hike, the central bank will release its summary of economic projections for this year, 2023, and the subsequent two years, as well as over the longer run. The Fed releases these projections four times each year.
Little relief for those in debt:Fed poised to announce a smaller rate hike but impact still looms large
Most economists expect the Fed will raise its median 2023 inflation forecast as well as the level it sees its short-term benchmark fed funds interest rate to be.
What should we expect Powell to say?
Powell is expected to reiterate that…
