More Rate Hikes Are Here

More Rate Hikes Are Here
Carl Hazeley

almost 2 years ago1 min

The Federal Reserve (the Fed) hiked US interest rates by 0.25% on Wednesday, as expected, highlighting the central bank’s focus on bringing inflation – currently at record highs – down to a more manageable level.

The chart shows the Fed’s “dot plot”, illustrating its committee members’ forecasts for US interest rates this year and beyond. The green line shows the median forecast: the Fed’s expecting rates to rise from 0.5% currently to 1.75-2% this year and 2.75% next year.

The risk, though, is that still-high inflation plus higher interest rates will significantly slow down economic growth. And it sounds like the Fed’s okay with that: it’s prioritizing price stability, arguing it’s necessary for a strong labor market. Given that price stability is and full employment are the Fed’s main goals, it can perhaps be forgiven for its willingness to sacrifice economic growth to achieve them.

And it’s not just the US: the Bank of England just hiked UK interest rates for the third time in a row, while also warning that inflation in the country could top 8% this year. That’d squeeze consumers’ budgets and therefore weigh on economic growth.



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG