Fed kept federal funds rate target unchanged at 0-0.25%. And, “in light of inflation developments and the further improvement in the labor market”, Fed will now reduce monthly purchases of of treasury securities and MBS at a faster rate of USD 20B and USD 10B respectively. That is, the tapering speed is doubled.
In the new median economic projections for 2022:
- GDP growth forecast was raised from 3.8% to 4.0%.
- Unemployment forecast was lowered from 3.8% to 3.5%.
- PCE inflation forecast was raised from 2.2% to 2.6%.
- Core PCE inflation forecast was raised from 2.3% to 2.7%
- Federal funds rate forecast was raised from 0.3% to 0.9%.
In the new dot plot:
- All members project one rate hike or more in 2022.
- 5 members project two rate hikes in 2022.
- 12 members project three hikes or more in 2022.
