United States Fed Funds Rate2022 Data - 1971-2021 Historical - 2023 Forecast

Federal Reserve Chair Jerome Powell reiterated Fed's commitment to do-whatever-it-takes to control high inflation and said the bigger risk is to fail to restore price stability. Powell also noted during the ECB's annual conference that the US economy is in a good shape and well positioned to withstand tighter monetary policy and that he hopes growth will remain positive, although there is a risk it will slow more than needed. He also confirmed the Fed is raising rates expeditiously and aims to move into restrictive territory fairly quickly. The Federal Reserve increased the funds rate by 75bps to 1.5%-1.75% during its June 2022 meeting, instead of 50bps initially expected. Meanwhile, several Fed officials have been advocating for rapid interest rate hikes to bring the inflation back to the 2% target. A 75bps or 50bps increase is expected in July.

In testimony to the Senate banking committee on Wednesday, Fed Chair Powell acknowledged that steep interest rate hikes may cause a recession in the US, and avoiding it mostly depends on the factors beyond Fed control. “The other risk, though, is that we would not manage to restore price stability and that we would allow this high inflation to get entrenched in the economy,” Powell added. “We can’t fail on that task. We have to get back to 2% inflation.” In regards to recent rate hikes Chair also said "We anticipate that ongoing rate increases will be appropriate", "Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We, therefore, will need to be nimble in responding to incoming data and the evolving outlook." The Federal Reserve increased the funds rate by 75bps to 1.5%-1.75% during its June 2022 meeting, instead of 50bps initially expected, after the inflation rate unexpectedly accelerated last month to 41-year highs.

The Federal Reserve increased the funds rate by 75bps to 1.5%-1.75% during its June 2022 meeting, instead of 50bps initially expected, after the inflation rate unexpectedly accelerated last month to 41-year highs. It is the biggest rate increase since 1994, and Chair Powell signaled a similar move could come at the next meeting but he does not expect 75bps moves to be common. Policymakers see interest rates increasing to 3.4% this year, well above 1.9% expected in March. Meanwhile, the economy is seen expanding 1.7% this year, below 2.8% estimated in March and the growth outlook was also lowered to both 2023 (1.7% vs 2.2%) and 2024 (1.9% vs 2%). PCE inflation is seen higher at 5.2% in 2022 (vs 4.3% expected in March) while the outlook was revised lower for both 2023 (2.6% vs 2.7%) and 2024 (2.2% vs 2.3%). The jobless rate is seen higher for the 3-year period: 3.7% for 2022 (vs 3.5%), 3.9% in 2023 (3.5%) and 4.1% in 2024 (vs 3.6%).