Reuters
As the Fed plans to ‘raise and hold,’ new projections may show the cost
New U.S. Federal Reserve projections, issued later this month alongside an expected half-point interest rate increase, could show the central bank’s target rate headed toward levels last seen on the eve of the 2007 financial crisis, and will also reveal policymakers’ best guess of the fallout that will have for a so-far resilient job market. A stronger-than-expected U.S. employment report for November showed firms added 263,000 workers, with hourly wages rising at a 5.1% annual rate and the size of the labor force itself shrinking – all signs of a job market both tight and speeding ahead even as the Fed hopes it will begin to cool. Coupled with an only modest decline in inflation so far, new projections from the Fed’s 19 policymakers are likely to show rates continuing to rise and to remain elevated through 2023, countering current market expectations for rate cuts by the end of next year.
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