Members of the Federal Reserve now see at least two interest rate hikes in 2023, according to the central bank’s so-called dot-plot projections.
Wednesday’s forecast showed that 13 members believe the Fed will hike rates in 2023 and the majority of them believe the central bank will hike at least twice that year. Only 5 members still see the Fed remain unchanged until 2023. In fact, 7 of the 18 members see the Fed possibly raising rates as early as 2022.
Previously expected in March, four of the 18 members of the Federal Open Market Committee were looking for a rate hike at some point in 2022. At the same time, seven members saw their rates rise in 2023.
A child walks past the Federal Reserve Board building Marriner S. Eccles on Constitution Avenue, NW, Monday April 26, 2021.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
Each quarter, FOMC members forecast where interest rates will go in the short, medium and long term. These projections are visually represented in graphs below called a dot plot.
Here are the Fed’s latest targets, published in Wednesday’s press release:
Here’s what the Fed’s forecast looked like in March 2021:
The Federal Reserve also slightly raised its economic expectations for 2021, according to the central bank’s summary of economic projections released on Wednesday.
The central bank now expects real gross domestic product to rise 7.0% in 2021, down from 6.5% forecast at its March meeting. The Fed also raised its real GDP forecast for 2023 to 2.4% from 2.2% previously forecast.
Source: Federal Reserve
The Fed also sharply increased its inflation forecast for the year. The central bank is now forecasting inflation at 3.4% this year, above its previous estimate of 2.4%. The Fed also slightly raised its PCE inflation estimates for 2022 and 2023.
Core PCE inflation is expected to reach 3.0% in 2021, up from 2.2% in March. The Core PCE for 2022 is now expected at 2.1%.
The Fed still estimates that the unemployment rate will fall to 4.5% in 2021. The FOMC expects the unemployment rate to drop to 3.8% and 3.5% in 2022 and 2023, respectively.
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