Fed signals it will raise rates one more time this year before it ends hiking campaign

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Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting, at the Federal Reserve in Washington, DC, on July 26, 2023.

The Federal Reserve stayed put on Wednesday, but forecast it will raise interest rates one more time this year, according to the central bank’s projections released on Wednesday.

Projections released in the Fed’s dot-plot showed the central bank would hike rate to a median 5.6% by the end of 2023, up from the current range between 5.25%-5.5%. Twelve Fed officials at the meeting penciled in the additional hike, while seven opposed it. There are two more policy meetings left in the year.

Then the rate-setting Federal Open Market Committee projected two rate cuts in 2024, which is two fewer than its forecast in June. That would put the funds rate around 5.1%.

The dot plot also moved higher for 2025, with the median outlook at 3.9%, compared with 3.4% previously.

Here are the Fed’s latest targets:

Fed members also updated its Summary of Economic Projections, revising their 2023 economic growth expectations up sharply. The Committee now expects gross domestic product increase by 2.1% this year, more than double the 1% estimate from June.

As for inflation, the Fed expects that the core personal consumption expenditures price index would decline to 3.7%, down 0.2 percentage points from June.

The projection for the unemployment rate now stands at 3.8%, compared to 4.1% previously.

— CNBC’s Jeff Cox contributed reporting.

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