Fed Will Not Slow Down Until Inflation at 2% after 75bps Rate Hike in September

The U.S. Federal Reserve on Wednesday raised its benchmark interest rates by another 75 basis points and signalled that the central bank will keep raising rates well above the current level to bring down 40-year high inflation.

In its third consecutive three-quarter percentage point raise yesterday pushed the Fed’s funds rate to a range of 3%-3.25%, which was the highest level since early 2008.

The Fed’s Chairman Jerome Powell said that his main message has not changed since Jackson Hole, and that is the central bank is strongly resolved to bring inflation down to 2%, and will keep at it until the job is done.

Analysts are now seeing a terminal rate of 4.50-4.75% by next year with another 75bp hike in November, followed by a 50 bp in December and another 25bp hike in February.