The Fed: Higher For Longer

The FOMC provided its latest Summary of Economic Projections (SEP) today after the committee announced a 50bps rate hike to a range of 4.25%-4.50% (table). At his press conference, Fed Chair Jerome Powell acknowledged that that the rate is now restrictive, but not restrictive enough.

The SEP included the "dot plot" showing the forecasts of the 19 participants of the FOMC. Seventeen of them predicted that the federal funds will exceed 5.00% next year. The median forecast of the committee's participants is now 5.1%, up from 4.6% in the September dot plot. The good news is that the median forecast drops to 4.1% in 2024 and 3.1% in 2025.