Fed officials project more 2023 rate rises, amid hope inflation will still cool

U.S. Federal Reserve officials penciled in additional rate rises for this year and said they foresee inflation pressures continuing to ease over the next few years, in updated forecasts released on Wednesday.

The projections, released quarterly, came as part of a Federal Open Market Committee meeting that saw policymakers hold their interest rate target range steady at between 5% and 5.25%, bypassing an increase for the first time since they kicked off their aggressive rate rise campaign in March 2022.

Officials now expect the fed funds rate to top out at 5.6% this year, implying two more 25 basis point increases in 2023, up from the 5.1% they projected in the last set of forecasts released in March.

Officials see their target rate going down in 2024, sliding to 4.6% versus the 4.3% forecast in March, and to 3.4% in 2025, compared to the 3.1% in the March forecasts.

Fed officials maintained their long-run projection of the federal funds rate target at 2.5%, where it has resided almost without change since 2019.

In their forecasts, policymakers were more upbeat about the economic outlook this year and expect the job market to endure smaller job losses compared to the March outlook, while inflation is seen on a similar path relative to three months ago.

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