The Federal Open Market Committee (FOMC) has raised rates at a breakneck pace this year. After slashing 150 basis points between February and April 2020 amid the COVID-19 pandemic, they stayed near zero through 2021. However, the current target rate is 4.25% to 4.5%, and more increases are expected in 2023.
This followed as the U.S. inflation far outpaced the Fed’s typical 2% target since early 2021 and continued to rise through the year into 2022 when it peaked at 9.1% in June. Though inflation has eased somewhat in the last few months, it is still substantially high. The Fed does not expect rates to return to the neutral benchmark of 2.5% until 2025.
