Fed Makes 3rd Straight Major Rate Hike, Signals More to Come

The latest 0.75 percentage point increase brings the Fed's benchmark interest rate to its highest mark since early 2008.
The facade of the Federal Reserve Bank.

In its latest attack on persisting high inflation, the Federal Reserve enacted another major hike for its key interest rate Sept. 21, raising it by 0.75 percentage points for a third straight time. The U.S. central bank also forecasted that continued large rate hikes will be needed into next year.

The latest increase puts the Fed’s short-term interest rate at a range of 3% to 3.25%, which is its highest mark since early 2008.

And it’s expected to move considerably higher. In its latest Federal Open Market Committee (FOMC) release, Fed officials forecast that the bank will raise that benchmark rate — directly impacting consumer and business loans — to approximately 4.4% by the end of 2022. That would be a full point higher than the Fed had forecasted just a few months earlier in June. Further still, the Fed said it expected to raise the rate again in 2023 to approximately 4.6%, which would be the highest mark since 2007.

The Fed’s latest economic forecasts weaker economic growth over the next few years alongside rising unemployment that is projected to hit 4.4% by the end of next year, compared to its current 3.7% mark. The new FOMC forecast has the economy growing by only 0.2% for 2022, far below the 1.7% forecast issued in June. That growth is projected to be 1.2% in 2023; 1.7% in 2024; and 1.8% in 2025. For context, real GDP growth was 2.2% in 2019; -3.5% in 2020; and 5.7% in 2021.

Despite the rate hike, the Fed still forecasts core inflation — which excludes volatile food and energy categories — to be 3.1% at the end of 2023, which is far above its target of 2%.

Related Posts

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.