Key Takeaways From the Fed’s Rate Decision and Updated Projections
- The Fed downshifted to a 50 basis-point hike, as telegraphed, following four straight 75 basis- point increases. The unanimous decision brought the target rate to a 4.25%-4.5% range, the highest level since 2007
- Everything else released at 2 p.m. skewed hawkish: The median forecast for rates at the end of 2023 is now 5.1%, higher than investor expectations and up from 4.6% in the prior round of projections in September; most officials did foresee rate cuts in 2024, with the median rate forecast at 4.1%, slightly higher than in September
- The distribution of forecasts for 2023 was on the higher side, with seven officials above 5.1%, 10 at 5.1% and two at 4.9%
- The unemployment rate is seen rising to 4.6% at end of 2023 and holding there in 2024, compared with the current 3.7% level; GDP growth seen at 0.5% in 2023, down from 1.2% in September
- The FOMC statement retained language saying “ongoing” hikes will be appropriate to reach “sufficiently restrictive” stance that returns inflation to 2% over time
(Bloomberg) -- For Bloomberg's TOPLive blog on the Fed decision and press conference, click here
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