Before completing the inflation fight, the Fed predicted hikes rates as elevated as 4.6%

September 23, 2022:-The Federal Reserve will raise interest rates as high as 4.6% in 2023 before the central bank stops its fight against which soars inflation, according to its median forecast released.

On Wednesday, the Fed raised benchmark interest rates by another three-quarter of a percentage point to almost 3%-3.25%, the highest since 2008.

The median forecast is showing that central bank officials expect to hike rates to 4.4% by 2022. With two policy meetings left in the calendar year, the central bank could conduct another 75-basis-point rate hike before the year-end.

The known dot-plot, which the Fed uses to signal its outlook for the path of interest rates, shows six of the 19 “dots” would take rates even higher, to a 4.75%-5% range in the coming year.

The series of significant rate hikes are anticipated to slow down the economy. The short story of Economic Projections from the Fed shows showing the unemployment rate is calculated to increase to 4.4% by the coming year from its current 3.7%. Therefore, GDP growth is forecast to slump to just 0.2% in 2022.

With the almost tightening, headline inflation, measured by the Fed’s opted personal consumption expenditures price index, is expected to be 5.4% this year. The gauge stood at 6.3% in August. Fed officials see inflation decrease to the Fed’s 2% goal by 2025.