Your #1 source for auto industry news and content

Fed raises interest rates by another 0.75 points to curb US inflation

The Fed expects to raise interest rates by at least another 1.25 percentage points in its two remaining sessions this year.

In a highly anticipated move, the Federal Reserve raised benchmark interest rates by another three-quarters of a percentage point on Wednesday and indicated that the rate hikes would keep coming until inflation eases.

Fed officials signaled their intention to raise interest rates until the funds level hits a “terminal rate,” or endpoint, of 4.6% in 2023.

To curb skyrocketing inflation, the Central Bank increased its federal funds rate to a range of 3%-3.25%, the highest level since 2008. Projections after the meeting show that the Fed expects to raise interest rates by at least another 1.25 percentage points in its two remaining sessions this year.

Fed Chairman Jerome Powell gave a post-meeting press conference, during which he reasserted that his message had not changed since his speech at Jackson Hole, referring to the Fed’s annual symposium in Wyoming this past August. “The FOMC is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done,” Powell said.

In March, interest rates were near zero, and the rate increases mark the most aggressive tightening from the Fed since the 1990s. The hopes are that the interest rate hikes will curb inflation. Still, Federal Open Market Committee members have indicated that the rate hikes will have consequences and could bleed over into many consumer adjustable-rate debt instruments, such as home equity loans, credit cards, and auto financing. On top of that, officials expect unemployment to rise to 4.4% by next year, up from the current level of 3.7%.

Slowing GDP growth, combined with the other direct consequences of a rate hike and no drops next year, could lead to a recession. Powell conceded that a recession is possible. “No one knows whether this process will lead to a recession or, if so, how significant that recession will be.”


Did you enjoy this article? Please share your thoughts, comments, or questions regarding this topic by connecting with us at newsroom@cbtnews.com.

Be sure to follow us on Facebook, LinkedIn, and TikTok to stay up to date.

While you’re here, don’t forget to subscribe to our email newsletter for all the latest auto industry news from CBT News.

CBT News
CBT News
CBT Automotive Network is a multimedia broadcast platform serving automotive professionals. With interviews featuring the biggest names in the industry, daily newscasts following top stories, up-to-date market data, and exclusive articles covering the latest industry trends, CBT is the leading voice of the retail automotive industry.

Related Articles

Latest Articles

From our Publishing Partners