after slashing its economic growth forecast and lifting the Fed funds rate by 0.5 percentage points to a 4.25 per cent to 4.5 per cent target range.
“I don’t think it would qualify as a recession because you have positive growth. It’s slow growth, it’s below trend, it’s not going to feel like a boom,” Mr Powell said, “I don’t think anyone knows whether we are going to have a recession or not.”P 500 and the Nasdaq falling about 0.5 per cent while two- and 10-year bond yields rallied.
Goldman Sachs economists correctly forecast the Fed’s new estimate of interest rates to peak at between 5 per cent and 5.25 per cent. Nomura had expected a terminal rate of 4.75 per cent to 5 per cent, down from their previous forecast of 5.50-5.75 per cent. “We welcome the recent inflation reports, but we are realistic about the broader project [of reducing inflation]. We need to be honest with ourselves that core inflation is still 6 per cent. Right now, the focus has to be on getting inflation down.,” Mr Powell said.
Wednesday’s decision follows four consecutive 75 basis-point hikes that have boosted rates at the fastest pace since Paul Volcker led the central bank in the 1980s.