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MNI STATE OF PLAY: Fed Eyes Third 75BP Hike, Higher Peak Rates

(MNI) WASHINGTON

Updated dot plot should concede greater harm to growth and employment as rates rise.

The Federal Reserve on Wednesday is widely expected to lift its overnight borrowing rate by 0.75 percentage point for a third straight meeting and signal a higher peak for interest rates next year as inflation continues to move sideways at a level more than triple its 2% target.

The move would take the federal funds rate to a 3%-3.25% target range for the first time since 2008. Accompanying that decision, a quarterly refresh of the FOMC's economic projections will likely show a faster pace of tightening for the remaining months of 2022 and into 2023 than officials expected in June, as well as lower growth and higher inflation and unemployment.

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The Federal Reserve on Wednesday is widely expected to lift its overnight borrowing rate by 0.75 percentage point for a third straight meeting and signal a higher peak for interest rates next year as inflation continues to move sideways at a level more than triple its 2% target.

The move would take the federal funds rate to a 3%-3.25% target range for the first time since 2008. Accompanying that decision, a quarterly refresh of the FOMC's economic projections will likely show a faster pace of tightening for the remaining months of 2022 and into 2023 than officials expected in June, as well as lower growth and higher inflation and unemployment.

Keep reading...Show less