The Federal Reserve will hike interest rates to as high as 5.1% in 2023 before the central bank ends its fight against runaway inflation, according to its median forecast released Wednesday.
The expected "terminal rate" of 5.1% is equivalent to a target range of 5%-5.25%. The forecast is higher than the 4.6% projected by the Fed in September.
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The Fed announced a 50 basis point rate hike Wednesday, taking the borrowing rate to a targeted range between 4.25% and 4.5%, the highest level in 15 years.
The so-called dot plot, which the Fed uses to signal its outlook for the path of interest rates, showed 17 of the 19 "dots" would take rates above 5% in 2023. Seven of the 19 committee members saw rates rising above 5.25% next year.
For 2024, the rate-setting Federal Open Market Committee projected that rates would fall to 4.1%, a higher level than previously indicated.
Here are the Fed's latest targets:
"The historical record cautions strongly against prematurely loosening policy. We will stay the course, until the job is done," Fed Chairman Jerome Powell said during a news conference Wednesday.
The series of rate hikes is expected to slow down the economy. The Summary of Economic Projections from the Fed showed the central bank expected a GDP gain of 0.5% for 2023, barely above what would be considered a recession.
The committee also raised its median anticipation of its favored core inflation measure to 4.8%, up 0.3 percentage point from the September projections.