According to projections released Wednesday, the Federal Reserve will hike rates roughly six times this year, bringing its benchmark interest rate to 2%.
According to the release, the median member of the Federal Open Markets Committee expects the Fed Funds rate to be 1.9% at the end of the year. The target range was raised to between 25 and 50 basis points. A basis point is the same as a percentage.
There is a large gap between the individual projections, with one member seeing rates near 1.5% at the end of the year while another sees the rate crossing 3%. The central bank sees the rate rising in the future.
The Committee wants to achieve maximum employment and inflation at the rate of 2 percent over the long run. The central bank said in its policy statement that it expects inflation to return to its 2 percent objective and the labor market to remain strong.
The majority of members expected three total hikes in 2022, according to the committee's previous projections.
The Fed funds rate would have gone up between 75 and 100 basis points. The rate is projected to rise this year.
Market expectations have moved toward more hikes in recent months as inflation has remained high and central bankers have signaled a more aggressive stance.
The most likely outcome is seven 25-basis point hikes by the end of the year according to the markets. According to the latest CNBC Fed Survey, respondents expected an average of 4.7 hikes this year.
While the Fed is expected to mostly stick to 25-basis point hikes, it could choose to go up 50-basis points or more in one step.
The members of the committee raised their expectations.
Projections for PCE inflation come in at 4.3% in 2022. The committee projected a 2.5% in 2022, 2.3% in 2023 and 2% in 2024.
During his press conference Wednesday, Chair Powell said that participants continue to see risks as weighted to the upside.
The economic growth expectations were cut by the Fed. In December, the committee's median projections called for 4% economic growth.
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