Fed hikes by 75bps to 1.50-1.75%. Esther George dissented and voted for a 50bps hike only. Fed said that it’s “highly attentive to inflation risks” in the statement. Also, Fed now forecasts interest rate to be at 3.4% by the end of this year, sharply higher than prior estimate of 1.9%. Also, in the new dot plot, all members penciled in rate hikes to 3.125% and above by the end of 2022.
In the new median economic projections, federal funds rate is forecast to be at:
- 3.4% by the end of 2022 (up from 1.9%)
- 3.8% by the end of 2023 (up from 2.8%)
- 3.4% by the end of 2024 (up from 2.8%)
GDP growth is forecast to be at:
- 1.7% in 2022 (down from 2.8%)
- 1.7% in 2023 (down from 2.2%)
- 1.9% in 2024 (down from 2.0%)
PCE inflation is forecast to be at:
- 5.2% in 2022 (up from 4.3%)
- 2.6% in 2023 (down from 2.7%)
- 2.2% in 2024 (down from 2.2%)
Core PCE inflation is forecast to be at:
- 4.3% in 2022 (up from 4.1%)
- 2.7% in 2023 (up from 2.6%)
- 2.3% in 2024 (unchanged).
Unemployment rate is forecast to be at:
- 3.7% in 2022 (up from 3.5%)
- 3.9% in 2023 (up from 3.5%)
- 4.1% in 2024 (up from 3.6%)
