Fed ready to act

Fed ready to act

Two interest rate increases coming this year, four in 2023. By Fitch Ratings

We expect the US Federal Reserve to raise interest rates twice this year and four times in 2023, taking the Fed funds rate (upper bound) to 1.75% by the end of 2023 from 0.25% currently.

The updated US interest rate forecasts reflect the major pivot by the Fed at its policy meeting on Dec 14 and 15, 2021, prompted by evidence that inflation is broadening and underscored by the meeting minutes released later.

An earlier forecast — for a single increase of 25 basis points in 2022 and two in 2023 — would have taken the upper bound to 1% at the end of 2023. However, it was published on Dec 7, predating the Fed’s meeting, in which it signalled that net asset purchases would…