The Federal Reserve will deliver more interest rate hikes next year even as the economy slips toward a possible recession, Fed Chair Jerome Powell said on Wednesday, arguing that a higher cost would be paid if the U.S. central bank does not get a firmer grip on inflation.
Recent signs of slowing inflation have not brought any confidence yet that the fight has been won, Powell told reporters after the Fed's policy-setting committee raised its benchmark overnight interest rate by half a percentage point and projected it would continue rising to above 5% in 2023, a level not seen since a steep economic downturn in 2007.
Those rises in borrowing costs would come despite an economy that Fed officials projected will operate at near stall speed through next year, with an annual growth rate of 0.5% and an unemployment rate nearly a full percentage point higher by the end of 2023, well beyond the increase historically associated with a recession.