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Closeup view of the Federal Reserve building

FOMC Meeting: Key Takeaways

Wells Fargo Investment Institute shares its key takeaways from the Federal Reserve’s decision to raise interest rates.

FOMC Meeting: Key Takeaways

September FOMC meeting | September 21, 2022

Policy Announcement

The Federal Open Market Committee (FOMC) increased the federal funds rate by .75% (matching the 75-basis-point ((100 basis points equals 1%)) increase from the June and July meetings), to 3.00% – 3.25%. The Federal Reserve (Fed) expects ongoing increases to the federal funds rate. The FOMC will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities in accordance with its statement released last May.

Topic Details
Stated Reasons

Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low.

Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.

Looking Forward

The Russia-Ukraine war is creating tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation, and are weighing on global economic activity.

The FOMC seeks to achieve maximum employment and inflation at a rate of 2.0% over the longer term, but for now remains highly attentive to inflation risks.

In support of these goals, the FOMC anticipates that ongoing increases in the target range will be appropriate; however, the Fed is leaving its options open as to the magnitude of future hikes and remains dependent on incoming data.

What Else?

The median FOMC projection for the terminal federal funds rate during this cycle is now 4.6%. This is above the longer-term neutral rate expectation of 2.5%. The new terminal rate expectation assumes several 50- or 75-basis-point rate hikes for the remainder of 2022 and throughout 2023.

The FOMC median projections increase inflation expectations for this year from 5.2% at the June meeting to 5.4%, while also decreasing the FOMC’s expectation for real economic growth for the year from 1.7% in June to 0.2%.

The vote in favor of the Fed action was unanimous.

Upcoming Meeting Schedule

November 2 | December 14* | February 1 | March 22*

*Indicates the meeting is associated with a summary of economic projections. In addition, every meeting will be accompanied by a press conference.

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