Federal Reserve: Expect 3 interest-rate hikes in 2022 | |
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Anonymous Coward (OP) User ID: 80610477 United States 12/29/2021 03:36 PM Report Abusive Post Report Copyright Violation | "The inflation that we got was not at all the inflation we were looking for," Powell said. What about interest rates? Projections released by the central bank predict three interest-rate hikes next year and three more in 2023. That's significantly more than the single rate jump it had forecast in September, and indicates the central bank is much more concerned about rising prices than it was two months ago. Economists said the rate hikes could begin as soon as March, but some expect economic weakness to push lift-off until the summer. Asked about the change in attitude, Powell told reporters: "It's essentially higher inflation and faster, much faster progress in the labor market." He also noted that high inflation could dampen the economic recovery by canceling out the wage gains that lower-paid workers have made in recent months amid a widespread labor shortage. "We have to make sure that higher inflation doesn't get entrenched. It's one of the two main threats, the other being the pandemic, to getting back to maximum employment," he said. Why it matters That benchmark interest rate — which was slashed to near-zero last year and remains there — affects what consumers and businesses pay for mortgages, credit card purchases, personal and business loans, and other debt. Raising the rate makes it more expensive to borrow or spend money, slowing down spending and potentially tamping down inflation. But hiking the rate too fast could damage the labor market, which is still below its 2019 levels. |