US Federal Reserve is planning more rate hikes than expected

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Fed Chairman Jerome Powell: An eye on inflation

Photo: DREW ANGERER / AFP

The US Federal Reserve could raise its key interest rate faster than previously expected.

For the coming year 2022, the central bankers expect a total of three interest rate hikes of 0.25 percentage points each, according to the Fed's new forecasts on Wednesday.

So far, only an interest rate hike has been suggested.

According to the projections, another three interest rate hikes could follow in 2023, and two further hikes are forecast for 2024.

The Fed's forecasts are the result of the expectations of the individual central bankers in the FOMC Monetary Policy Committee.

Growth forecast for 2021 lowered again - and inflation expectations increased

The US Federal Reserve has also lowered its forecast for economic growth this year again.

In September, the central bank had assumed an increase of 5.9 percent, now it expects growth of 5.5 percent, as the forecasts published by the Fed on Wednesday showed.

In June, the central bank had expected growth of 7 percent for the world's largest economy.

The central bank now expects growth of 4 percent for 2022.

The central bank also revised its inflation expectations upwards again. For 2022, the Fed is now expecting an inflation rate for consumers of 5.3 percent. In September it had assumed 4.2 percent. For 2022, the Fed expects an inflation rate of 2.6 percent, 0.4 percentage points more than in the September forecast. In the medium term, the central bank is aiming for an average inflation rate of around 2 percent.

The central bankers lowered their forecast for the unemployment rate at the end of the year from 4.8 percent to 4.3 percent, which reflects the ongoing recovery in the labor market.

Many companies already complain of a shortage of workers.

At the height of the Corona crisis, the rate had reached almost 15 percent.

Before the pandemic, the unemployment rate was 3.5 percent, the lowest level in decades.

la / dpa