The Federal Reserve recently paused on a further increase in the federal funds rate for June, keeping it in a target range of 5% to 5.25%. However, the Federal Open Market Committee’s projections released on Wednesday indicated that two more increases are coming and that rates could move as high as 5.6% by the end of 2023. The FOMC’s statement noted that holding steady at this meeting allows them to assess additional information and its implications for monetary policy before deciding whether or not to raise rates again at their next meeting.
In order to determine how much policy firming is necessary in order return inflation back up over time, they will take into account cumulative tightening of monetary policy, lags with which monetary policy affects economic activity and inflation along with economic and financial developments according CNBC reported . Eighteen FOMC members indicated their expectations for rates through 2023 via “dot plot” projections; four saw one more rate increase this year while nine expected two; two added a third hike while one saw an additional four; only two said they don’t anticipate any more increases this year. Following these forecasts being made public ,the Dow Jones Industrial Average declined nearly 300 points driven lower by anticipation of future rate hikes . Fed Chair Jerome Powell said during his news conference following announcement that central bank has “a long way to go” before reaching 2 % inflation target set out by committee members .
At present ,committee members have hiked their forecasts from previous years now projecting fed funds rate 4.6 % 2024 & 3..4 % 2025 respectively according CNBC reportage
