Fed members predict more hikes with the benchmark rate above 3% by year-end

U.S. Federal Reserve Chairman Jerome Powell testifies during the Senate Banking Committee hearing titled “The Semiannual Monetary Policy Report to the Congress”, in Washington, U.S., March 3, 2022.

The fed funds rate is expected to increase by another 1.75 percentage points by the end of the year, according to the Federal Reserve.

The dot plot forecast released by the Fed shows that the target range for the fed funds rate would be 3.4%.

The Fed raised rates by 75 basis points, or 0.75 percentage point, on Wednesday. The difference is one basis point.

Only five of the 18 Federal Open Market Committee members see the rate ending at a higher level than the 3.4% rate. The fed funds rate is expected to end the year at 3.2%.

The committee predicts interest rates in the short, medium and long term. A dot plot is a visual representation of these projections.

The Fed Chairman said during a news conference that the central bank could raise rates by 75 basis points next month in order to stave off inflation.

The Fed released its latest inflation and growth projections.

By the end of the year, the central bank expects inflation to rise by 5.2%. That is up from a previous projection. The core PCE is expected to increase by 4.3%, up from a previous estimate of 4.1%.

The GDP growth projection was slashed by the Fed. The central bank lowered its growth expectations for the next two years.

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