• Policy makers now see two increases in 2017, not three
  • Fed also lowers long-run estimate of neutral interest rate

Federal Reserve policy makers scaled back the number of interest-rate increases they anticipate for 2017 after an expected hike later this year, projections released by the central bank on Wednesday showed.

They see a federal funds rate of 0.6 percent at the end of this year, up a quarter percentage point from where it is now, according to the median forecast of Federal Open Market Committee participants. Three of 17 officials don’t anticipate a change in 2016.

Policy makers project two more increases of a quarter point each in 2017 and an additional three hikes in 2018, based on their median estimate. That compares with their last forecast in June, when they envisaged raising rates three times each in both those years.

“The Fed continues to bend to the market’s interest-rate path, seeing just two hikes in 2017 after one this year,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research. “The forward path is flat, not as flat as a pancake, but pretty close.”

Fed officials see rates rising further in 2019, to 2.6 percent at the end of that year from 1.9 percent at the close of 2018. This is the first time that the central bank has released projections for 2019.

Policy makers also reduced their estimate of the long-run federal funds rate, to a median projection of 2.9 percent from 3 percent in June.

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