A lot can happen in two years. No one in early 2018 was predicting a global pandemic that would shut down the world in 2020, destroying lives and wrecking the economy. Back then, the Federal Reserve had just raised its target interest rate for overnight loans between banks to 1.5% and was forecasting a steady increase to around 3.5% in 2020. Rates never got anywhere close to that level, topping out at 2.5% in 2019 before the Fed started cutting them to 1.75% in the last half of that year amid signs the economy was slowing and possibly headed into a recession in 2020.
I bring this up because markets suffered a bit of a tantrum this week after the central bank updated its outlook, and seven of the rate-setting Federal Open Market Committee’s 18 members predicted a rate increase — not this year or even in 2022 but sometime in 2023.
