Profit Sheets

Fed Outcome: 75 Bps Rate Hike, Target Range Forecasts & Hawkish Prospects

September 22, 2022 02:03 AM

By Malvika Gurung — The US Federal Reserve hiked its by 75 basis points on Wednesday for the third consecutive time, widely at par with the markets’ expectations.

The central bank’s officials forecast the target range for the benchmark policy rate to rise to 4.4% by the end of 2022 and reach 4.6% in 2023, as per the updated quarterly estimates published in conjunction with the statement.

The central bank has reiterated its commitment to fighting the decades-high inflation and works to push it under the targeted 2% range. The FOMC in its statement on Wednesday underlined that it is ‘highly attentive to inflation risks.

With the 75 bps rate hike on Sept 21, the benchmark policy rate now lies in the 3-3.25% range, the highest level since before the financial crisis of 2008.

The projections by Fed officials indicate a probable fourth 75-bps rate hike in the next FOMC meeting in November.

Kunal Sodhani, Vice President, Global Trading Center, Shinhan Bank, says in a note to, “Fed Dot plot for September 2022 shows the median rate at the end of 2022 at 4.4%, up from 3.4% in June 2022. Also, further for 2023 eyeing 4.50%-5.00% seems to be very hawkish.”

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