Officials also were more optimistic about unemployment this year, now seeing a 4.1% rate by year's end compared with 4.5% in March's prediction. Those changes to the rate outlook occurred as members raised their expectations for economic growth for 2023, now anticipating a 1% gain in GDP as compared to the 0.4% estimate in March. The long-run expectation for the fed funds rate held at 2.5%.
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The future-year readings, though, do imply the Fed will start cutting rates – by a full percentage point in 2024, if this year's outlook holds. That's up from respective forecasts of 4.3% and 3.1% in March, when the Summary of Economic Projections was last updated.
Members also moved up their forecasts for future years, now anticipating a fed funds rate of 4.6% in 2024 and 3.4% in 2025. Two more members added a third hike while one saw four more, again assuming quarter-point moves. Two members indicated they don't see hikes this year while four saw one increase and nine, or half the committee, expect two. Bank of America said in a note after the meeting that it expects the Fed to move in July and September.ĭuring the press conference, Powell said the FOMC hadn't yet made a decision about whether another increase would be likely in July.įOMC members approved Wednesday's move unanimously, though there remained considerable disagreement among members. Assuming the committee moves in quarter-point increments, that would imply two more hikes over the remaining four meetings this year. The dots moved decidedly upward, pushing the median expectation to a funds rate of 5.6% by the end of 2023. The surprising aspect of the decision came with the "dot plot" in which the individual members of the FOMC indicate their expectations for rates further out. The expectation leaned heavily against an increase after policymakers, particularly Powell and Vice Chair Philip Jefferson, had indicated that some change in approach could be in order. Markets had widely been anticipating the Fed to "skip" this meeting – officials generally prefer the term to a "pause," which implies a longer-range plan to keep rates where they are. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower
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