(FiveNation.com)- The Federal Reserve is predicting a fierce economic contraction later this year, while the market is indicating that might still be too optimistic, according to Breitbart. The Federal Open Market Committee (FOMC) released its “Summary of Economic Projections” this month showing that the expected growth is down from a projection in December, down a tenth of a point to .4 percent.
The Fed is projecting a more positive labor market, however, with the unemployment rate dropping .1 point from 4.6 to 4.5 percent. This is the opposite direction from the 4.4 percent to 4.7 percent predicted in December which reportedly suggests that the economy is not as easy to read.
Inflation is expected to continue. While personal consumption expenditure (PCE) inflation was projected to fall to 3.1 percent, the Fed now sees 3.1 percent as more realistic. Core PCE was previously 3.5 percent but is now projected to be just a point higher.
Despite less growth, increased rates of employment, and inflation, the Fed is not budging on its rates. The Federal Reserve, concerned with taming inflation, raised interest rates from 4.50% to 4.75%, a major difference when it was nearly zero at the start of last year, according to Newsmax.
When the Fed meets again in May, there is little chance that they will raise rates again, Breitbart reports. The markets are now reportedly projecting that by the September meeting, the Fed is going to likely slash rates, but they are leaving just over a 1 percent chance that rates will be increased from 4.75% to 5%.
Earlier this month, the Republican-controlled House passed the Reduce Exacerbated Inflation Negatively Impacting the Nation (REIN IN) Act, according to OANN. The legislation is reportedly targeting President Biden’s executive orders by requiring the administration to elaborate on each will ease inflation, which peaked last June at 9.1%.