FOMC Increases Funds Rate, Raises Inflation Outlook & Lowers GDP Projections
by:Tom Moeller
|in:Economy in Brief
At today's meeting of the Federal Open Market Committee (FOMC), the Fed announced a 75 basis point increase in the target for the Federal funds rate to 3.00% - 3.25%. It was the third consecutive increase of that magnitude and places the rate at the highest level since January 2008. The Fed "... anticipates that ongoing increases in the target range will be appropriate." The move was expected by the Action Economics Forecast Survey.
The statement accompanying today's action read, "Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low."
"Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures."
In addition, the Fed will continue reducing its portfolio of Treasury securities and agency debt and agency mortgage-backed securities.
Today's action was endorsed by all members of the FOMC.
The statement issued following today's meeting can be found here.
The Fed updated its economic projections at today's meeting. It lowered its upcoming GDP growth forecast and raised its PCE inflation forecast. Other changes were as follows:
FOMC Projections
| - | 2022 (Old) | 2022 (New) | 2023 (Old) | 2023 (New) | 2024 (Old) | 2024 (New) | 2025 |
|---|---|---|---|---|---|---|---|
| Real GDP (Q4/4) | 1.7 | 0.2 | 1.7 | 1.2 | 1.9 | 1.7 | 1.8 |
| PCE Price Inflation (Q4/Q4) | 5.2 | 5.4 | 2.6 | 2.8 | 2.2 | 2.3 | 2.0 |
| Core PCE Price Index (Q4/Q4) | 4.3 | 4.5 | 2.7 | 3.1 | 2.3 | 2.3 | 2.1 |
| Unemployment rate (4Q%) | 3.7 | 3.8 | 3.9 | 4.4 | 4.1 | 4.4 | 4.3 |
| Appropriate Fed Funds Rate (%) | 3.4 | 4.4 | 3.8 | 4.6 | 3.4 | 3.9 | 2.9 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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