Fed Expects Three Quarter-Point Increases in 2022, More to Come in Following Years

Source: Federal Reserve

Officials of the Federal Reserve expect three quarter-point increases in the benchmark federal funds rate in 2022, along with doubling the reduction of its bond-buying program.

• Officials of the Fed predict three quarter-point hikes will be appropriate in 2022, following the retention of borrowing costs near zero in over a year since March 2020.
• The latest projections indicate another three hikes in 2023, on top of two more in 2024, which will bring the funds rate to 2.1%.
• The Fed said it will also double the pace of reducing its bond-buying program to $30 billion a month, on track to end in early 2022 rather than in the middle of the year.
• Fed Chair Jerome Powell defended the outlook as he said economic developments and changes warrant the evolution of monetary policy, citing the current economic growth.
• Powell also noted that policymakers anticipate a gradual rate of policy firming and do not anticipate rate hikes before ending the taper process.