Fed Expects 2 Rate Hikes in 2023, Stock Market Plunges, Powell Anticipates Higher Inflation

The Federal Reserve on Wednesday told the public that it has forwarded the time frame for raising interest rates. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain,” the Federal Open Market Committee (FOMC) said in a statement.

The Meeting Before the ‘Meeting’ – Fed Expects Two Rate Hikes in 2023

FOMC press conference: Not a single question by the media about record and expanding wealth inequality, asset bubbles, speculative behavior, or the homeless camp.

— Sven Henrich (@NorthmanTrader) June 16, 2021

• “The problem now is that demand is very strong, incomes are high, people have money in the bank accounts. Demand for goods is extremely high, and it hasn’t come down,” Powell explained on Wednesday. “But in terms of over-correcting, there is a possibility on the other side of this that inflation could actually be quite low going forward. But that is not where our focus is right now.”
• At the post-meeting news conference, Powell discussed inflation. “Our expectation is these high inflation readings now will abate,” Powell stressed to the press. The post-meeting statements from the Fed saw the inflation expectation rise to 3.4%.
• “We don’t in any way dismiss the chance that it can work out that this goes on longer than expected, and the risk would be that over time, it does begin to affect inflation expectations,” Powell remarked.
• “We’re on path to a very strong labor market,” Powell also said at the post-meeting news conference.

What do you think about the Fed explaining it may raise interest rates twice in 2023 and expects higher inflation levels? Let us know what you think about this subject in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons