US Fed lowers GDP forecast for 2023; raises estimates for inflation, unemployment

By Ovunc Kutlu

ISTANBUL (AA) - The Federal Reserve lowered its US economic growth forecast for 2023 and raised estimates for inflation and unemployment, according to projections materials released Wednesday.

The central bank expects the American economy to grow 0.5% next year, down from its forecast of 1.2% growth made in September.

The terminal rate, the peak spot where the federal funds rate is expected to climb before they are trimmed, was raised to 5.1% for 2023, from an estimate in September of 4.6%.

The personal consumption expenditures (PCE) price index, the central bank's preferred inflation indicator, is expected to come in at 3.1% in 2023, up from 2.8% in September.

Core PCE inflation was revised up to 3.5% for 2022, from the 3.1% forecast made three months ago.

The unemployment rate is estimated to climb to 4.6% in 2023, up from an expectation of 4.4% in September, according to forecasts.

The new projections came as the Fed raised its benchmark interest rate by 50 basis points, carrying the federal funds rate to the range of 4.25% - 4.5%.