The central bank will update its forecast for future interest rates, as well as its estimates for GDP, unThe central bank will revise its projections for GDP, unemployment, and inflation including its expectation for future interest rates.
The Federal Reserve is anticipated to raise interest rates by three quarters of a percentage point on Wednesday, something it hasn’t done in 28 years.
The central bank will increase the rate that banks charge each other for overnight borrowing to a range of 1.5 percent -1.75 percent, where it hasn’t been since before the economic crisis started. This is in reaction to skyrocketing inflation and erratic financial markets.
Almost all adjustable-rate products, including credit cards and home equity loans, are impacted by this rate, which also affects consumer borrowing.
Here’s a short look at what the Fed is most likely to do in addition to raising rates:
By using a “dot plot” of the expectations of each member, it can adjust its forecast for interest rates in the future.
Update its predictions for GDP, inflation, and unemployment.
According to economists, the Fed will lower GDP forecasts this year while increasing inflation and unemployment rate projections.
Change the post-meeting statement’s language to reflect the current situation, which is that inflation is happening more quickly than expected and calls for more active measures to stop it from reaching its highest point since December 1981.
Fed Chairman Jerome Powell will speak to the media after the FOMC meeting. Powell will address 30 minutes after the ruling, which is due at 2:00 p.m. ET.
Powell will be questioned about the Fed’s most recent adjustment to rate expectations. He has been promoting the idea that a series of successive rate increases of 50 basis points would be the most likely scenario.
In reality, Powell ruled out 75 basis points as a possibility during his most recent news conference in May by stating that it was “not something the committee is currently contemplating.” One tenth of a percentage point is referred to as a basis point.
If inflation readings don’t start to decline, Powell may now give hints that several 75 basis point raises are feasible.