The Federal Reserve forecast an aggressive campaign of interest rate hikes to fight inflation, but that raises the question of whether the central bank can actually succeed without doing serious harm to the economy.
The Fed raised interest rates by a quarter-point Wednesday, the first hike since 2018. At the same time, its forecast showed Fed officials expect six more rate hikes this year and three next year.
Stocks rallied and ended the day sharply higher, after initially selling off on the central bank’s forecast. The Dow was up 518 points, or 1.5%, while the Nasdaq jumped 3.8% to 13,436. In the bond market, yields jumped but were off their highs later in the day. The 10-year yield, which influences mortgages and other loans, was at 2.19%, down from 2.24% at its intraday high. Yields move opposite price.
