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Essentials of Monetary Policy

Federal Reserve (Fed). We Have Liftoff—and More Rate Hikes to Come

March 16, 2022
Francis Généreux
Principal Economist

As expected, the Fed today raised its key rate for the first time since 2018. Based on recent Fed comments, inflation readings and other economic indicators, it was time. But the Committee also penciled in several short-term rate hikes, which came as a surprise. The Fed’s new dot plot shows rates hitting 2.00% (higher bound of the target range) by the end of the year. That means the Fed plans to raise rates 25 points at each of its next six meetings—more than the three rate hikes telegraphed in December. It also upgraded its inflation forecast sharply.