The Federal Reserve is slowing rate hikes but signaling more to come.

Federal Reserve officials slowed their campaign to cool the economy at a meeting on Wednesday, but indicated that they expect inflation to be more stubborn than they previously expected and that they expect to raise interest rates next year more than they initially expected. forecast.

Policymakers voted to raise borrowing costs by half a percentage point at the meeting, which was withdrawn after four straight three-quarter point moves. Their policy rate is now set at 4.25 to 4.5 percent, the highest since 2007.

After months of moving rapidly to buy more money — to curb consumer and business demand and cool an overheating economy — central bankers are entering a phase in which they will adjust policy more carefully. This will give them time to see how the labor market and inflation react to the policy changes they have already introduced.

Still, the central bank’s economic forecasts, released Wednesday for the first time since September, sent a clear signal that authorities are not giving up on their battle against rapid inflation to slow the process. The new estimates outline that to combat rapid inflation, borrowing costs will have to go higher and cause more economic pain than previously expected.

“We still have a lot of work to do,” Fed Chairman Jerome H. Powell said during his news conference following the release.

Officials expect to raise interest rates to 5.1 percent by the end of 2023, suggesting they will make adjustments worth three-quarters of a percentage point. That would raise borrowing costs by half a percent next year, more than officials had previously expected. Officials expect to maintain the elevated policy setting for the long term — they expect their policy rate to be 4.1 percent by the end of 2024, up from 3.9 percent previously.

That stance is expected to cool the economy in particular. Central bankers expect unemployment to rise significantly next year, from 3.7 percent now to 4.6 percent, and then rise for several years. Growth is expected to be much weaker in 2023 than previously expected, pushing the economy to the brink of recession.

The central bank’s more aggressive stance comes as central bankers worry that inflation will remain stubbornly high for years to come. Although inflation has already started to moderate from a 40-year low, central bank policymakers think it will take a long time to fully return inflation to their 2 percent target. Their preferred inflation rate ends at 3.1 percent in 2023 and 2.5 percent in 2024.

Mr. Powell has repeatedly emphasized that

He said during his news conference that central bank officials need “substantial additional evidence” to believe inflation is on a sustainable downward path. And given, the central bank is not done.

“Our judgment today is that we still do not have a sufficiently restrictive policy stance,” Mr. Powell said, underscoring that 17 of the Fed’s 19 officials expect rates to rise 5 percent or more.

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