Wells Fargo Financial Institution: The Federal Reserve will increase interest rates, but the end of the monetary contraction cycle is coming!
The Federal Reserve increased its interest rate by 0.25% to 4.75-5%. Federal Reserve policymakers have raised interest rates by 4.75% over the past 12 months, the fastest rate of monetary tightening since the early 1980s. The Federal Reserve continued to maintain a relatively optimistic assessment of the current state of the economy. However, the central bank noted that recent developments will likely lead to tighter credit conditions and likely affect economic activity; Although the extent of these effects is unclear.
Previously, the Fed thought that a sustained increase in interest rates would be needed to bring inflation back to its 2 percent target, but now it thinks that some additional accommodative monetary policy may be in order. In short, the end of the Fed’s monetary tightening cycle appears to be coming. The median forecast for the terminal interest rate was only 0.25% higher than the previous forecast, and we expect the Fed to deliver another 0.25% rate hike at its next meeting.