The Federal Reserve will raise interest rates as high as 4.6% in 2023 before the central bank stops its fight against soaring inflation, according to its median forecast released on Wednesday.
The Fed on Wednesday raised benchmark interest rates by another three-quarters of a percentage point to a range of 3%-3.25%, the highest since early 2008.
The median forecast also showed that central bank officials expect to hike rates to 4.4% by the end of 2022. With only two policy meetings left in the calendar year, chances are the central bank could conduct another 75-basis-point rate hike before the year-end.
The so-called dot-plot, which the Fed uses to signal its outlook for the path of interest rates, showed six of the 19 "dots" would take rates even higher, to a 4.75%-5% range next year.
Here are the Fed's latest targets:
The series of big rate hikes are expected to slow down the economy. The Summary of Economic Projections from the Fed showed the unemployment rate is estimated to rise to 4.4% by next year from its current 3.7%. Meanwhile, GDP growth is forecast to slump to just 0.2% for 2022.
With the aggressive tightening, headline inflation, measured by the Fed's preferred personal consumption expenditures price index, is expected to decline to 5.4% this year. The gauge stood at 6.3% in August. Fed officials see inflation eventually fall back to the Fed's 2% goal by 2025.