On September 20th, the Federal Reserve unanimously voted not to raise the rates. Currently, the rates are at a range of 5.25% – 5.55%, the highest level in 22 years. However, the policymakers reiterated that they would raise the interest rates one more time before the end of the year. The new economic projections by Fed officials who participated in the meeting expect the rates to rise to 5.6% later this year. The Fed will meet twice before the end of the year, i.e., November and December, to determine the way forward. Fed Chairman Jerome Powell stated that the economic data will determine the hike expected later this year. The Fed’s next meeting will be held October 31st – November 1st. 12 out of 18 Fed officials predicted at least 2 more quarter-point rate hikes, while 4 predicted one more hike. Only 2 officials predicted the rates will remain unchanged in 2023.

Since March of last year, interest rates were raised 11 times to try to
stop inflation and stabilize the economy. In one year, interest rates surged from zero to over 5%, the fastest since the 1980s. Raising interest rates slows down the economy because rates on business and consumer loans increase significantly. The Fed officials speculate that they are close to a level of rates that will slowly bring inflation down without a recession. Of the 19 Fed officials, only one expects the Federal Open Market Committee (FOMC) to raise interest rates above 6% in 2024.