By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. Falling gas prices have slightly lowered headline inflation, which was a still-painful 8.3% in August compared with a year earlier. Fed officials now foresee the economy expanding just 0.2% this year, sharply lower than their forecast of 1.7% growth just three months ago. Even with the steep rate hikes the Fed foresees, it still expects core inflation — which excludes the volatile food and gas categories — to be 3.1% at the end of next year, well above its 2% target. The Fed’s rapid rate hikes mirror steps that other major central banks are taking, contributing to concerns about a potential global recession.

Source: The Guardian September 21, 2022 18:54 UTC