Federal Reserve officials on Wednesday raised their forecasts for the target range for interest rates at the end of this year and next, indicating that they expect inflation to decline further in the short term than they did three months ago.
New quarterly forecasts from US central bank officials published today, Wednesday, along with a 75 basis point increase in interest rates, showed that their average forecast for the benchmark interest rate is to rise to 3.4%, by the end of 2022. Their March forecast was 1.9%.
It is now expected that the federal funds rate at the end of 2023 will be 3.8%, up from 2.8%, in the forecast in March, while it is expected to reach 3.4% at the end of 2024, compared to 2.8%, in the expectations of March, which It reflects expectations that the central bank will cut rates by then.
For his part, Fed Chairman Jerome Powell expected the decision at the next meeting to be an increase in interest rates between 50 and 75 basis points.
Federal Reserve officials now expect annual inflation at the end of this year to be 5.2%, up from their March forecast of 4.3%.
They also expect an unemployment rate of 3.7%, at the end of 2022, compared to 3.4%, in their expectations in March. The unemployment rate in the United States was 3.6%, in May.
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