The Federal Reserve launched a high-risk effort to tame the worst inflation since the early 1980s, raising its benchmark short-term interest rate and signaling up to six additional rate hikes this year.
The central bank, in a policy statement, along with quarterly projections and remarks by Chair Jerome Powell at a news conference, pointed to a somewhat more aggressive approach to rate hikes than many analysts had expected.
The Fed also released a set of quarterly economic projections Wednesday that underscored the potential for extended interest rate increases in the months ahead. Seven hikes would raise its short-term rate to between 1.75% and 2% at the end of 2022. Fed officials also forecast four more rate increases in 2023, which would boost its benchmark rate to 2.8%.
after the pandemic struck. And many economists say the Fed has made its task riskier by waiting too long to begin raising rates. At his news conference, Powell said he believed that inflation would slow later this year as supply chain bottlenecks clear and more Americans return to the job market, easing upward pressure on wages.
The Fed’s forecast for numerous additional rate hikes in the coming months initially disrupted a strong rally on Wall Street, weakening stock gains and sending bond yields up. But stock prices more than recovered their gains soon after the press conference began.
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