The Federal Reserve building is pictured in Washington on Monday, March 8, 2021.
Caroline Brehman | CQ-Roll Call, Inc. | Getty Images

The Federal Reserve on Wednesday dialed up its economic growth expectations but signaled that there are no expected interest rate hikes for the next two years.

The so-called dot plot projections budged little with most members still expecting to keep rates near zero through 2023.

Four of the 18 FOMC members were looking for a rate hike at some point in 2022, compared to just one at the December meeting. For 2023, seven members see a rate increase, compared to five in the December forecast. As the chart shows, a strong majority forecast no hikes until the “longer run.”

Every quarter, members of the Federal Open Market Committee forecast where interest rates will go in the short, medium and long term. These projections are represented visually in charts below called a dot plot.  

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

This is what the Fed’s forecast looked like in December 2020:

The Federal Reserve sharply ramped up its economic expectations for 2021, according to the central bank’s Summary of Economic Projections released on Wednesday.

The central bank now expects real gross domestic product to grow 6.5% in 2021, compared to its 4.2% forecast from its December meeting. The Fed also upped its 2022 real GDP forecast to 3.3% from 3.2% expected previously.

Source: Federal Reserve

The Jerome Powell-led Fed estimates the unemployment rate will fall to 4.5% in 2021, below the previous estimate of 5.0%. The FOMC expected the unemployment rate to drop to 3.9% and 3.5% in 2022 and 2023, respectively.

The central bank now sees inflation running to 2.4% this year, above its previous estimate of 1.8%. The Fed also slightly hiked its PCE inflation estimates for 2022 and 2023.

Core PCE inflation is expected to come in at 2.2% in 2021, up from December’s forecast of 1.8%. Core PCE for 2022 is now expected at 2.0% and 2.1% in 2023.

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