The Federal Reserve said Wednesday it expects the fed funds rate to increase by another roughly 1.75 percentage points over the next four policy meetings to end the year above 3%.
To be exact, the midpoint of the target range for the fed funds rate would go to 3.4%, according to the so-called dot-plot forecast released by the Fed.
On Wednesday, the Fed raised rates by 75 basis points, or 0.75 percentage point, to a range of 1.5% to 1.75%. One basis point equals 0.01%.
Just five of the 18 Federal Open Market Committee members see the rate ending at a higher level than the midpoint 3.4% rate, while eight members see it about that level. The remaining five members expect the fed funds rate to end the year at roughly 3.2%.
Every quarter, members of the committee forecast where interest rates will go in the short, medium and long term. These projections are represented visually in charts below called a dot plot.
Here are the Fed's latest targets, released in Wednesday's statement:
This is what the Fed's forecast looked like in March 2022:
Despite these official forecasts, Fed Chairman Jerome Powell said Wednesday during a news conference that the central bank could take an even more aggressive stance to stave off inflation and raise rates by another 75 basis points next month.
The Fed also unveiled its latest inflation and economic growth projections Wednesday.
The central bank sees inflation, as gauged by the personal consumption expenditures price index, rising by 5.2% by year-end. That's up from a March projection of 4.3%. The core PCE, which strips out volatile food and energy prices, is expected to rise by 4.3% — up from a previous estimate of 4.1%.
As for the economy, the Fed slashed its GDP growth projection for 2022 to 1.7% from 2.8%. The central bank also lowered its growth expectations for 2023 and 2024 to less than 2%.
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