Federal Reserve

Fed's 'dot plot' points to four rate hikes this year, up from the three previously expected

Fed raises rates and inflation forecasts
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Fed raises rates and inflation forecasts

All it took were three more Federal Open Market Committee members to get more hawkish to push up the expectation for interest rate hikes.

The committee, which sets monetary policy for the Federal Reserve, each quarter issues its so-called dot plot of member expectations for interest rates.

At the March meeting, six members had expected the fed funds rate to stay between 2 percent and 2.25 percent, indicating one more rate increase after the quarter-point hike approved Wednesday.

This week's two-day meeting saw one member shift the estimate to 2.25 percent to 2.5 percent. Two more increased their estimates a quarter point to 1.75 percent to 2 percent. Calculating the median of the dots then pushed the overall forecast to equate to two more hikes this year – likely in September and December.

Fifteen members vote in all.

Before the meeting, the CME's FedWatch tool had been pointing to a 46.5 percent chance of a fourth hike, meaning investors got a mild surprise from the central bank this week.

Markets widely expected the Fed's policymaking body to increase its benchmark interest rate a quarter point at the meeting.

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