Interest rates may not be going down anytime soon. The Federal Reserve hiked rates by half a point to a range of 4.25% to 4.5% in December to help combat inflation, CBC News reported, and promises more increases in 2023.

                By                    Josephine Nesbit

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Inflation sits at 7.1% year-over-year in November 2022, according to the Bureau of Labor Statistics, but the Fed noted that the current benchmark rate is not enough to suppress price and wage growth, CBC News added.

CBC News noted that out of 19 Federal Reserve officials on the monetary policy committee, 17 said the Fed’s target interest rates would have to rise above 5% in 2023. This means that the rates borrowers would have to pay would be much higher. This could bring U.S. prime rates above 7% in 2023.

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The Fed hopes it can cool inflation without pushing the economy into a recession. Fed Chair Jerome Powell said in November that he sees a path to a soft landing, ABC News reported, which would be a quick slowdown of inflation without a large increase in the unemployment rate.

When asked during a news conference if a soft landing was no longer achievable, Powell said we could still avoid a recession.

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“No, I wouldn’t say that. No, I don’t say that,” Powell said during a press conference, as reported by CNBC. “To the extent we need to keep rates higher and keep them there for longer inflation […] I think that that narrows the runway, but lower inflation readings, if they persist in time, could certainly make it more possible.”

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