Fed hikes interest rates by three-quarters of a percentage point for the third straight time, an aggressive move to curb stubborn inflation.
The supersized hike, which was unfathomable by markets just months ago, takes the central bank’s benchmark lending rate to a new target range of 3%-3.25%. That’s the highest the fed funds rate has been since the global financial crisis in 2008. Wednesday’s decision marks the Fed’s toughest policy move since the 1980s to fight inflation.
Core Personal Consumption Expenditures, the Fed’s favored measure of rising prices, is projected to hit 4.5% this year and 3.1% in 2023, the Fed’s SEP showed. That’s up from June projections of 4.3% and 2.7%, respectively. Perhaps most important to investors seeking forward guidance from the Fed is the projection of the federal funds rate, which outlines what officials think is the appropriate policy path for rate hikes going forward.
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