The decision left the benchmark federal funds rate in a target range of 5% to 5.25%. Fresh quarterly Fed forecasts showed borrowing costs rising to 5.6% by year end, according to the median projection, compared with 5.1% in the previous round of projections.
Of the 18 policymakers, 12 penciled in rates at or above the median range of 5.5% to 5.75%, showing most policy makers agree further tightening is needed to contain price pressures. Chair Jerome Powell said nearly all Fed officials expect it will be appropriate to raise interest rates “somewhat further” in 2023 to bring down inflation.
From a CFO’s perspective, the Fed has indicated rate cuts are probably “a couple of years out,” implying that interest rate expense budgets, and capital expenditure budgets should include higher rates for at least the next 12-24 months.
“Inflation pressures continue to run high and the process of getting inflation back down to 2% has a long way to go,” Powell said at a post-meeting press conference. – Bloomberg