Federal Reserve 'dot Plot' Now Signals 3 Rate Hikes In 2017

By Jeffry Bartash Markets MarketWatch Pulse

The Federal Reserve's new "dot plot" is signaling three increases in interest rates in 2017 instead of two under the prior estimate, according to documents released Wednesday. The Fed stuck to its forecast for three rate hikes in both 2018 and 2019, though it nudged its long-run target for fed funds back up to 3% from 2.9%. The dot plot is used by Fed policymakers to mark their forecasts for interest rates over the next several years. Wall Street had speculated the Fed might more aggressively raise rates in 2017. Inflation has picked up and the new Trump administration plans to boost spending and cut taxes in an effort to speed up the economy. The Fed on Wednesday also raised its key short-term rate to a range of 0.5% to 0.75% from 0.25% to 0.5%.

Continue Reading Below

Copyright © 2016 MarketWatch, Inc.