US Federal Reserve officials expect additional interest rate increases in the coming months and for it to reach 5.1% by the end of the year, as it is now in a range between 4.75% and 5% after raising it by 25 basis points on Wednesday. And 10 of the policy makers expected interest rates to rise by a quarter of a percentage point again by the end of this year, while 7 others see the possibility of raising them to a higher level.
Beating inflation may require raising interest rates again this year, policymakers in the House of Representatives expect US Federal Reserve (the Central Bank), as well as that interest rates reach 5.1% at the end of the year, as they are now in a range between 4.75% and 5% after raising them by 25 basis points on Wednesday, according to the average forecast in the latest quarterly summary of economic expectations issued by the Council.
The forecasts of 18 Fed policymakers differed. Ten of the policymakers expect interest rates to rise by a quarter of a percentage point again at the end of this year, while another 7 see the possibility of raising interest rates even higher.
Only one member said there would be no need to raise interest rates.
The benchmark interest rate is expected to stabilize at 4.3% next year, based on the median forecast.
Four policymakers expect interest rates to reach 5.1% or higher, and another four expect rates to stabilize below 4% next year.
Policy makers saw the inflation rate on its way down to 3.3% in the last quarter of this year, thanks to the Federal Reserve’s decisions to raise interest rates.
The Central Bank warned in a statement that the recent banking crisis “is likely (…) to burden economic activity, employment and inflation,” noting that “the size of these effects is uncertain.”
However, he reaffirmed that “the US banking system is solid and resilient,” and that the committee in charge of monetary policy “is still alert to inflation risks.”