Fed officials eyeing steeper rate hike path

The U.S. Federal Reserve expects to push interest rates up a bit more aggressively in 2015 and 2016 than policymakers thought likely just a few months ago.

The average policymaker at the Fed believes overnight rates should be raised to 1 percent by the end of next year and 2.25 percent by the end of 2016, according to the median of quarterly projections released by the central bank on Wednesday.

In its previous projections released in December, the median forecast was for 0.75 percent and 1.75 percent, respectively.

Fed officials also showed a little less optimism on the economic growth front over the coming two years, but their projections for unemployment suggested a quicker tightening in the labor market than they had expected previously.

That could explain why some policymakers may be advocating a faster increase in rates. The Fed has held overnight rates near zero since December 2008.

The quarterly projections showed that 13 of the central bank's 16 policy-making officials believe the first rate hike should come some time next year. Only one now feels that they should be raised this year, down from two previously, while two officials think the Fed should hold off until 2016.

(Reporting by Timothy Ahmann)