Federal Reserve Projects Interest Rate Rise in 2023
Posted on 06/16/2021
Due to substantial inflation in U.S. markets, Federal Reserve officials increased their expected pace of policy tightening amid optimism about the U.S. labor market and heightened concerns for inflation. Federal Reserve Chairman Jerome H. Powell informed media people that officials would begin a discussion about scaling back bond purchases used to support financial markets and the economy during the pandemic. Powell released forecasts that show they anticipate two interest-rate increases by the end of 2023. Officials now see rates rising to 0.6% by the end of 2023, up from 0.1%.
“The economy has clearly made progress,” Jerome Powell said after a two-day gathering of the Federal Open Market Committee (FOMC). “You can think of this meeting as the talking-about-talking-about meeting, if you like,” he added, referring to the discussion about tapering purchases.
“Progress on vaccinations has reduced the spread of Covid-19 in the United States,” the Fed said in its statement, which contained several upbeat revisions. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”
The Federal Reserve held the target range for its benchmark policy rate unchanged at zero to 0.25%, where it’s been since March 2020. Furthermore, the Federal Reserve maintained the US$ 120 billion pace of its Treasury securities and other government-backed bond purchases. The Federal Open Market Committee vote was unanimous.
Keywords: Federal Reserve System.