Fed Signals Prolonged Higher Interest Rates, Wall Street Reacts

The Federal Reserve has indicated that interest rates will remain "higher for longer," with updated economic forecasts suggesting that rates will stay elevated at least through 2026. While the central bank expects one more rate hike this year, it has lowered its inflation outlook, indicating a need for even higher real rates in 2023. The Fed sees higher real rates as necessary to slow down an economy that is growing more than expected. However, Chairman Jerome Powell emphasized that these forecasts are just estimates and not a definitive plan.