The Federal Reserve is inching toward acknowledging how painful its inflation fight is likely to be, but it’s still a lot closer to the optimists than the pessimists.
On a day when it raised interest rates by 0.75 percentage point to a range of 3% to 3.25%, the Fed also released economic projections showing that its median forecast for unemployment is 4.4% by the end of 2023, up from the current 3.7%, meaning more than a million fewer jobs as a result of its campaign.
That marked an increase from previous projections in June that showed unemployment peaking around 4.1%, which were widely panned as unrealistic. Yet the numbers still look rosy compared with the labor-market damage that historically accompanies rounds of aggressive monetary policy tightening.
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