The Federal Reserve’s policymakers believe that containing inflation may require just one more interest-rate hike this year, but less relief the following year than was deemed necessary three months ago.
After Wednesday’s 25-basis-point increase, U.S. central bankers anticipate the policy rate to reach 5.1% by the end of the year, according to the median estimate in the Fed’s most recent quarterly summary of economic projections.
The median projection was the same in December, before a slew of stronger-than-expected growth and inflation readings, but also before recent turmoil in the financial sector, which policymakers anticipate will weigh on economic growth.
The forecasts of the 18 policymakers were diverse, with seven policymakers predicting a higher appropriate rate ceiling. One policymaker believed that no additional rate increases would be required.
The benchmark rate is expected to end next year at 4.3%, according to the median forecast. Four policymakers anticipated that rates would conclude the year at 5.1% or higher, while four anticipated that they would end the year below 4%.
In December, Fed policymakers anticipated that the Fed policy rate would end 2023 at 5.1%, before falling to 4.2% in 2024.