The Fed’s New Dot Plot

By Christopher Condon

Federal Reserve officials followed through on an expected interest-rate increase and raised their forecast for economic growth in 2018, even as they stuck with a projection for three hikes in the coming year.

The 7-2 vote for the rate move, the Fed’s third this year, raises the benchmark lending rate by a quarter percentage point to a target range of 1.25 percent to 1.5 percent. Adding to policy tightening, the Fed also confirmed that monthly roll-offs from the central bank’s balance sheet would step up, as scheduled, to $20 billion from $10 billion beginning in January.

Policy makers left the number of hikes projected for 2018 effectively unchanged. The median forecast pegged the federal funds rate at 2.1 percent at the end of next year. That could, in part, reflect lingering concerns over sluggish wage and price gains. The Fed’s preferred gauge of inflation, based on consumer spending,gained just 1.6 percent in the year through October.

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