The Federal Reserve has been on a historic tear this year, struggling to suppress persistent record inflation with a series of aggressive rate hikes that have boosted the monetary body’s benchmark inter-bank lending rate at the fastest pace since 1982.

The strategy, which so far has included six rate increases this year, is one intended to quell the red-hot U.S. economy by increasing the price of debt, which, theoretically, puts downward pressure on consumer spending and overall economic activity in so-called “demand destruction.”

The interest rate pressure is surely showing its impacts in some areas, stifling the U.S. housing market by pushing mortgage rates north of 7% — more than double where they were a year ago — and fueling the steepest credit card interest rates in nearly three decades. But the targets most meaningful to the Fed when it comes to gauging its policy effectiveness, consumer spending and the jobs market, have so far remained resilient in the face of pricier debt.

So, how far will the Federal Reserve need to go before it declares victory over inflation and stands-down on its interest rate blitz?

With some signs of easing showing up in Labor Department’s October inflation report, economists are weighing in on when the Fed will reach its terminal rate, the peak rate at which the Fed backs off the boost cycle and begins to consider taking things the other direction.

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Why is the Fed still raising rates?

At the conclusion of its two-day meeting on Nov. 2, the Federal Reserve announced another jumbo .75% increase to its benchmark lending rate, marking the fourth straight increase of that size and sixth overall interest rate boost this year.

At a press conference following the announcement of the most recent rate hike, Fed Chairman Jerome Powell said that at some point it will be appropriate to slow the rate of interest rate increases but “we still have some ways to go” and did not signal whether the next interest boost, expected in December, would be a continuation of the .75% increases or a lower increment.

“Restoring price stability will require maintaining a restrictive stance on policy for some time,” Powell said.

But exactly how long is “some time”?

When will the interest rate boosting finally end?

Just a week after Powell’s missive, the Labor Department reported U.S. inflation came in at 7.7% in October. While it’s still a hefty number that’s hovering near 40-year highs, it’s the lowest year-over-year rate since January.

Now, economists are guessing the Fed’s interest rate express will come to a rest in spring 2023, but not before the benchmark rate, now in a range of 3.75% to 4.0%, hits a peak north of 5%.

In a Nov. 10 analysis, Wells Fargo economists offered a handicap on the Fed’s near-term plans, noting the particular resiliency of consumer spending, an anomaly that’s been propped up by still solvent reserves of record high household savings that were buoyed by a healthy in-flow of stimulus checks and spending habits stifled by pandemic restrictions.

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“In the past half century, the only other times the Federal Open Market Committee has raised rates faster was in the late 1970s and early 1980s when then-chairman Paul Volker famously ‘broke the back of inflation’,” Wells Fargo economists wrote. “Fast forward to today and core inflation continues to remain very high, even in the face of the measures taken already.

“For the FOMC, the resilience of demand turns up the pressure to keep raising rates. We expect the committee will hike rates 50 (basis percentage points) at each of its upcoming meetings in December and in February before scaling back to a 25 (basis percentage points) hike at its meeting in March. That would put the upper-end of the target range for the fed funds rate at 5.25% in March, where we expect it stay for the rest of 2023.”

A Reuter’s poll conducted in late October found similar sentiment among a group of U.S. economists, most of whom predicted the terminal rate would be reached early next year.

A strong 74% majority, 23 of 31, expected the Fed’s terminal rate to be reached by the end of the first quarter of 2023, while six said the second quarter and two economists chose the fourth quarter of next year.

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