According to the central bank’s so-called dot plot project, the Federal Reserve now sees at least two rate hikes in 2023.

Wednesday’s forecast showed that 13 members of the Fed’s Open Market Committee believe the Fed will hike rates in 2023, and the majority of them believe the central bank will hike at least twice this year. Only five members see the Fed until 2023. In fact, seven of the 18 members see the Fed may hike rates as early as 2022.

In March, four of the 18 FOMC members targeted a rate hike sometime in 2022. At the same time, seven members saw a rate hike in 2023.

Every quarter, the members of the committee forecast where interest rates will develop in the short, medium and long term. These projections are visually represented in graphs called the scatter plot below.

Here are the Fed’s latest targets, released in Wednesday’s statement:

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This is what the Fed’s forecast looked like in March 2021:

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The “longer term” items remained unchanged from the March FOMC meeting.

According to its summary of economic forecasts published on Wednesday, the Fed has also slightly raised its economic expectations for 2021.

For 2021, the central bank now expects real gross domestic product to grow by 7.0%, compared to the 6.5% forecast at its March meeting. The Fed also raised its forecast for real GDP for 2023 to 2.4% from previously expected 2.2%.

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Source: Federal Reserve

The Fed has also raised its inflation forecast for the year significantly. This year inflation is now 3.4%, above its previous estimate of 2.4%. The central bank has also slightly raised its PCE inflation estimates for 2022 and 2023.

Core PCE inflation is expected to be 3.0% in 2021, up from 2.2% in March. The core PCE for 2022 is now expected to be 2.1% and should remain at that level in 2023.

The Fed continues to estimate that the unemployment rate will drop to 4.5% in 2021. The FOMC expects a decline to 3.8% and 3.5% in 2022 and 2023, respectively.

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