Top Federal Reserve officials see inflation rising above 2% this year, but their median expectation is still for interest rates to stay close to zero at least through 2023, based on a Summary of Economic Projections released Wednesday.
The Federal Open Market Committee (FOMC), the U.S. central bank’s monetary-policy panel, will keep the target rate for federal funds in a range of 0% to 0.25%, according to a statement released after a two-day meeting. The Fed plans to keep buying $80 billion of U.S. Treasury bonds and $40 billion of agency mortgage-backed securities every month.
U.S. stocks rose after the report.
According to the summary of economic projections:
- Federal officials’ median expectation for growth this year in gross domestic product jumped to 6.5%, from a 4.2% rate in December, when they last disclosed projections.
- The unemployment rate is seen at 4.5% this year, down from a previously projected 5%.
- Inflation is now seen by Fed officials as averaging 2.2%, up from a 1.8% projection in December.
- The Fed funds rate is expected to stay close to zero through at least 2023, though four officials now see an initial rate increase as soon as next year. At the December meeting, no Fed officials were expecting a liftoff that soon.