Four Hikes in 2018 and a Funds Rate Above Neutral by the end of 2019

We will soon publish our updated forecast through 2020. We revised up GDP growth in 2017, have an unemployment rate in the fourth quarter of 2019 four tenths below participants’ September median projection,  and revised up wage inflation and core PCE inflation through 2020. 

This called for a faster pace of rate hikes, including four hikes rather than three in 2018 and an additional hike in 2020. That leaves the target range for the fund’s rate at year-end 2020 at 3.25%-3.50%, somewhat above FOMC participants’ median estimate of the longer-run fund’s rate (2.75%).

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