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WORLD

US Fed lowers economic growth forecast, raises terminal rate above 4.0 per cent

22/09/2022 03:11 PM

ANKARA  Sept 22 (Bernama) -- The Federal Reserve lowered its US economic growth forecast and raised its terminal rate above 4 per cent for 2022 and 2023, according to projections materials released Wednesday.

Anadolu reported that the Fed expects the American economy to grow 0.2 per cent this year, down from its previous forecast of 1.7 per cent growth made in June.

The growth estimate for 2023 was also lowered to 1.2 per cent, down from a projection of 1.7 per cent.

The terminal rate, the peak spot where the federal funds rate is expected to climb before they are trimmed, was raised to 4.4 per cent for 2022, from an estimate in June of 3.4 per cent.

That rate is projected at 4.6 per cent for 2023, up from 3.8 per cent.

The personal consumption expenditures (PCE) price index, the central bank's preferred inflation indicator, is expected to come in at 5.4 per cent in 2022, up from 5.2 per cent in June.

Core PCE inflation was also revised up to 4.5 per cent for this year, from the 4.3 per cent forecast made three months ago.

The unemployment rate is estimated to climb to 3.8 per cent in 2022, up from an expectation of 3.7 per cent in June, according to the forecasts.

The new projections came as the Fed raised its benchmark interest rate by 75 basis points for the third straight time, carrying the federal funds rate to the 3 per cent -3.25 per cent range.

Consumer inflation showed an annual increase of 8.3 per cent in August, above the 8.1 per cent market estimate, while it peaked at 9.1 per cent in June.

-- BERNAMA

 


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