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The Fed projects raising rates as high as 5.1% before ending inflation battle [1]

['Yun Li']

Date: 2022-12-14

The Federal Reserve will hike interest rates to as high as 5.1% in 2023 before the central bank ends its fight against runaway inflation, according to its median forecast released Wednesday.

The expected "terminal rate" of 5.1% is equivalent to a target range of 5%-5.25%. The forecast is higher than the 4.6% projected by the Fed in September.

The Fed announced a 50 basis point rate hike Wednesday, taking the borrowing rate to a targeted range between 4.25% and 4.5%, the highest level in 15 years.

The so-called dot plot, which the Fed uses to signal its outlook for the path of interest rates, showed 17 of the 19 "dots" would take rates above 5% in 2023. Seven of the 19 committee members saw rates rising above 5.25% next year.

For 2024, the rate-setting Federal Open Market Committee projected that rates would fall to 4.1%, a higher level than previously indicated.

Here are the Fed's latest targets:

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[1] Url: https://www.cnbc.com/2022/12/14/the-fed-projects-raising-rates-as-high-as-5point1percent-before-ending-inflation-battle.html

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