CUNA Senior Economist Dawit Kebede explains the possible impact the Federal Reserve’s updated monetary policy will have on inflation through 2023 in CUNA's latest Economic Update.
“If the Fed turns out to be particularly skillful and lucky, these [interest] rate movements will slow the economy enough to cool inflation without causing a recession. However, the risks are that the monetary tightening could cause a mild recession in 2023 or 2024.” Kebede said.
Highlights from the April update include:
“It is very important to get inflation under control, which is why the Federal Reserve already started raising the federal funds rate, and also announced several increases throughout the year…. The goal is to lift rates so they prevent prices from going up, but not so high that they slow down economic activity," he added.
Kebede also shared predictions on on the 10-year Treasury rate.
“Although difficult to forecast, we expect the 10-year Treasury rate to rise to 3.25% by December 2022, and to 3.5% next year.”