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Fed's key rate target could quadruple to 3% in a year, investor Dennis Gartman says

Now that the Federal Reserve has increased interest rates for the second time in a decade, the pace of hikes could really start moving, closely followed investor Dennis Gartman told CNBC on Thursday.

"If I've learned anything over the past 40 years [it] is that once the Fed begins of the process of tightening monetary policy, it shall take the overnight fed funds rate so much higher than almost anyone wants to imagine," the founder and publisher of The Gartman Letter said on "Squawk Box."

Following its two-day December policy meeting on Wednesday, the Fed raised its target for the fed funds rate, what banks charge to lend to each other overnight, from a range of 0.25 percent to 0.5 percent to 0.5 percent to 0.75 percent. Central bankers also projected three rate hikes for next year instead of two. The Fed last raised the cost of borrowing money in December 2015, the first such move in more than nine years.

"Can we see the fed funds rate a year from now at 3 percent? Very easily," predicted the 66-year-old Gartman, who now invests just his own money after spending years as a futures trader. "Can we see the fed funds rate two or three years from now at about 5 percent? Very likely."

"I remember trading spot on settlement Wednesdays, trading the overnight fed funds rate above 20 percent," he recalled. "Are we going to get there anytime in my lifetime? Likely not. But are we going to continue to see 25- and 50-basis-point increases over the course of the next several years? No doubt about it."

In addition to the fed funds rate, Fed policymakers on Wednesday approved a quarter-point increase in the discount rate, what the Fed charges to lend to banks, from 1 percent to 1.25 percent.

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