• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Investing 4 takeaways after the last Federal Reserve rate hike
Investing

4 takeaways after the last Federal Reserve rate hike

by December 15, 2022
by December 15, 2022 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

The much-awaited Federal Reserve decision is behind us. The Fed decided to hike the funds rate on Wednesday by another 50bp, bringing it to 4.5%.

It was all priced in, just like the outcome of other central banks due to deliver their monetary policy decisions this week. But because the Fed leads in this tightening cycle, the details mattered.

After the inflation report released last Tuesday, it was all but certain that the Fed will slow down the path of its interest rate hikes to 50bp. Still, a 50bp rate hike is historically big, showing the Fed’s relentlessness in fighting inflation and fulfilling its price stability mandate.

Here are four takeaways after Wednesday’s Fed hike:

Fed signals a higher terminal rate 

The unemployment rate is seen rising in the years ahead

GDP growth projection revised down in 2023

Fed is worried about inflation persistence

Fed signals a higher terminal rate

The market is interested in the dot plot whenever the Fed publishes its economic projections. It shows how the FOMC members view the future path of interest rates, and it usually moves markets.

On Wednesday, the dot plot implies another 75bp of tightening in the coming months. The terminal rate of the current tightening cycle is seen at 5.1% in 2023, and then the funds rate should gradually come down to 4.1% in 2024 and 3.1% in 2025.

It is worth noting that funds rate expectations for 2023, 2024, and 2025 were revised higher.

Unemployment rate to rise in the upcoming years

The Fed has a dual mandate – job creation and price stability. Therefore, in fighting inflation, it must consider the job market too.

But despite the Fed seeing a higher terminal rate in 2023, the unemployment rate is seen rising to 4.6% from 4.4% in both 2023 and 2024.

GDP growth projections revised down in 2023

Besides reduced employment, the Fed also sees slower activity. The GDP growth projections were revised down n 2023 and 2024.

Fed is worried about inflation persistence

Persistent inflation is what keeps the Fed vigilant. The Core PCE inflation was revised higher to 4.8% in 2022 from 4.5%, 3.5% in 2023 from 3.1%, and 2.5% in 2024 from 2.3%.

The post 4 takeaways after the last Federal Reserve rate hike appeared first on Invezz.

You Might Also Like
  • Why did Rivian pull the plug on its agreement with Mercedes-Benz?
  • Genesis CEO asks for patience from clients amid Gemini pressure
  • Frasers Group Defying Odds as Efforts to Scale Start to Pay
  • Novavax shares opened 20% down on Thursday: this is why
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Opera launches new Web3 security tools for crypto users
next post
Communicating Economics to Young People

You may also like

Gamma Scalping Options Trading Strategy

September 14, 2023

How did stock indexes perform in 2022? What next for...

January 5, 2023

Justin Wolfers: “Inflation has clearly peaked”; CPI at 7.1%

December 13, 2022

World Bank warns of global recession as growth forecasts cut...

January 11, 2023

What Are Covered Calls And How Do They Work?

May 18, 2024

Is There A ‘Free Lunch’ In Options?

May 28, 2024

Here’s what Fed Chair Jerome Powell’s remarks mean for the...

November 30, 2022

40+ Spotify statistics 2022: SPOT stock, revenue and performance

December 2, 2022

Bankman-Fried says he’s willing to testify before US House Committee

December 9, 2022

Stock market soars as inflation comes in below expectations

December 13, 2022

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters renovation

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025
    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,631 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,919 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,607 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,577 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,451 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters...

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Lloyds Bank share price forecast for...

    January 2, 2023

    As Asana stock price tumbles, has...

    December 2, 2022

    FTSE 100 forecast for December 2022

    December 5, 2022
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here