The Fed will raise rates to 5% and cause a global recession, analysts estimate – El Financiero

Fed officials will resolutely stand by their stance limiting next week, sending the basis for interest rates five percent in March 2023, which could cause a recession in the United States and the world, according to the economists surveyed Bloomberg.

The Federal Open Market Committee (FOMC) cut rates by 75 basis points for the fourth consecutive meeting as policymakers announced their decision on Wednesday in Washington, a survey showed.

Economists expect rates raise another half point in December, and then a quarter of a point in the next two meetings. Fed forecasts released at the September meeting showed rates reaching 4.4 percent this year and 4.6 percent next, before being cut in 2024.

Economists believe the Federal Reserve is determined not to pivot too early in the fight against inflation, which is at its highest point in 40 years. The move to a higher top rate will reflect stronger-than-expected growth in consumer prices, excluding food and energy, over the past two months. The survey of 40 economists was conducted from October 21 to 26.

“Inflationary pressures remain intense and the Fed will hike 75 basis points in November,” James Knightley, chief international economist at ING Groep NV, said in a survey response. “Currently, we see a more moderate increase of 50 basis points in December given the weakening economic and market environment,” but the risks are tilted towards a fifth increase of 75 basis points, he said.

Fed Chairman Jerome Powell said the central bank is firmly committed to recovery price stability and made repeated references to his predecessor Paul Volcker, who raised rates to unprecedented levels to combat inflation in the early 1980s. Powell warned that the process will be painful, as the goal is to stimulate below-trend growth to reduce price pressures and unemployment as a result.

Powell and his colleagues have not given up hope for a soft landing of the economy. But for the first time in polls leading up to the FOMC meeting, a majority of economists — three-quarters — estimate a recession is likely in the next two years, and most others see a forced takeoff with a period of zero or negative growth ahead.

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