On Wednesday, following a two-day long September policy meet of US Federal Reserve, the US Fed policymakers had decided to hike the US Central Bank’s benchmark borrowing costs by 75 bps (basis percentage point) to a range between 3.00 per cent to 3.25 per cent.
On top of that, adding further holocaust for US money markets, US Fed had forecasted that the September policy hike would highly likely to follow further large increases in interest rates over coming months. According to the US Fed’s projection, the US Central Bank’s benchmark borrowing cost could hit as much as 4.40 per cent by end-2022, while Fed policymakers also hinted that they could bank on a raise in interest rate up to 4.60 per cent earlier in 2023 in a bid to wrangle a strong upsurge in inflation indicators.
US Fed hikes interest rate by 75bps, sees further increases
Apart from that, according to the US Central Bank’s quarterly economic projection released shortly after the meet of Fed policymakers, the US economy is likely to witness a growth of 0.2 per cent this year, sharply down from the economy’s potential, while the US economy might just be able to cover some grounds next year and might witness a national GDP (Gross Domestic Product) growth of 1.2 per cent.
Adding further strains on an inflation-battered US economy, the US Fed clings on to its prior forecast that US labour market would face off a melt-down over second half of the year, while US unemployment rate could hit as high as 4.4 per cent by early-2023.
In the face of an unfathomable scale of hawkish stance from US Fed policymakers, the US Federal Reserve is now expecting its core inflation indicator to fall below a target range of 2.0 per cent by 2025.