The projections, which showed a steeper rate path than officials laid out in June, underscore the Feds resolve to cool inflation despite the risk that surging borrowing costs could tip the US into recession.
Before the release, traders expected rates to reach 4.5% in early 2023 before falling about a half point by the end of the year.
Powell and his colleagues, slammed for a slow initial response to escalating price pressures, have pivoted aggressively to catch up and are now delivering the most aggressive policy tightening since the Fed under Paul Volcker four decades ago.
The updated forecasts also showed unemployment rising to 4.4% by the end of next year and the same at the end of 2024 up from 3.9% and 4.1%, respectively, in the June projections.
Estimates for economic growth in 2023 were marked down to 1.2% and 1.7% in 2024, reflecting a bigger impact from tighter monetary policy.
Inflation peaked at 9.1% in June, as measured by the 12-month change in the U.S. consumer price index. But its failed to come down as quickly in recent months as Fed officials had hoped: In August, it was still 8.3%.
Job growth, meanwhile, has remained robust and the unemployment rate, at 3.7%, is still below levels most Fed officials consider to be sustainable in the longer run.
The failure of the labor market to soften has added to the impetus for a more-aggressive tightening path at the U.S. central bank.
Fed action is also taking place against the backdrop of tightening by other central banks to confront price pressures which have spiked around the globe. Collectively, about 90 have raised interest rates this year, and half of them have hiked by at least 75 basis points in one shot.
Fed action is also taking place against the backdrop of tightening by other central banks to confront price pressures which have spiked around the globe. Collectively, about 90 have raised interest rates this year, and half of them have hiked by at least 75 basis points in one shot.
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