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- The Fed announced it intends to raise the benchmark fed funds rate to a range between 1.75% and 2%.
- The Federal Open Market Committee also released its quarterly "dot plot," showing where Fed members expect rates to go over the next few years.
- The median member predicts rates will be between 2.25% and 2.5% by the end of 2018, suggesting two more hikes this year.
The Federal Reserve just announced, as widely expected, that it intends to raise the benchmark fed funds rate to a range between 1.75% and 2%. The central bank also gave us an idea about what its policymakers think is coming in the future.
The "dot plot," part of the Federal Open Market Committee's Summary of Economic Projections released along with its policy decision statement, shows where each participant in the meeting thinks the fed funds rate should be at the end of the year for the next few years and in the longer run.
The Fed releases those predictions in a chart that includes a dot for each of the members at their target interest rate level for each period.
While the "dot plot" is not an official policy tool, it provides some insight into how committee members feel about economic and monetary conditions going forward. Indeed, several commenters on Wall Street consider the chart to be pretty important, as it could give a sense of how many more hikes are coming.
The new dot plot, shown below, has the median FOMC member predicting a Fed funds rate of 2.25%-2.5% by the end of the year. Assuming that the Fed continues to raise rates in increments of 25 basis points, that means the median committee member expects two more hikes this year.
In the longer term, the median member expects rates to level out between 2.75% and 3%.
Here's the new Fed dot plot:
