By Ovunc Kutlu
ISTANBUL (AA) - The US Federal Reserve expects an additional rate hike in 2023 and indicated fewer rate cuts are expected next year, according to the bank's projection materials released Wednesday.
The terminal rate, the peak spot where the federal funds rate is expected to climb before being trimmed, was unchanged at 5.6% after the Fed skipped an interest rate increase at the conclusion of its two-day meeting and left the federal funds rate unchanged between the 5.25% - 5.5% target range.
It suggested that the Fed could make one more interest rate increase by 25 basis points, carrying the federal funds rate to between 5.5% and 5.75% in one of the remaining meetings this year.
The Fed's next two-day meetings will conclude Nov. 1 and Dec. 13.
As for next year, the terminal rate projection was moved up to 5.1%, from the previous projection of 4.6% made in June. That indicates the bank could wave off two rate cuts of 25 basis points in 2024.
- Core PCE projection revised down
The central bank, in addition, revised its 2023 growth forecast for the American economy to 2.1%, up from the previous estimate of 1% in June.
The personal consumption expenditures (PCE) price index was revised up to 3.3%, from 3.2%, for this year.
Core PCE inflation, the central bank's preferred inflation indicator, on the other hand, was revised down to 3.7% for 2023, from a 3.9% forecast made three months ago.
The unemployment rate is estimated to ease to 3.8% this year, down from an expectation of 4.1% in June, according to forecasts.