CUNA Senior Economist Dawit Kebede issued the following statement following the Federal Reserve meeting Wednesday:
“The Federal Reserve Open Market Committee (FOMC), as expected, raised the federal funds rate by 50 basis points, increasing the target range between 4.25% and 4.50%. This is consistent with the median projection of members of the FOMC for year-end from the September meeting.
“The FOMC signaled more interest rate increases for next year than previously thought. This is contrary to what markets were expecting based on recent consumer price index reports. There are signs that inflation is cooling down as gas prices decrease, supply chain conditions improve, and consumers demand shifted back to services from goods. However, prices are elevated relative to the Federal Reserve's target.
“High interest rates are weighing on the economy, slowing down investment activity. Declines in housing and business investment were a major drag during third-quarter economic activity. The labor market is currently strong but the Federal Reserve projects unemployment to rise to 4.6% by next year. Historical data indicates such a large increase in unemployment within a year period signals the beginning of a recession.”