Will the Fed shed light on its plans for later this year?

The Federal Reserve on Wednesday will conclude its two-day June policy meeting, at which it is widely expected to raise interest rates by half a percentage point. It will also release its summary of economic projections, which includes a so-called dot plot, showing members’ forecasts for interest rate policy. 

At the Fed’s May meeting, chair Jay Powell said that if inflation and economic conditions remained broadly in line with the bank’s expectations “we would have 50 basis point increases on the table at the next two meetings,” meaning in June and July. But the chances of another supersized rise in September are unclear and will depend on how much of an effect the continuing aggressive hiking cycle has on inflation. 

NatWest chief US economist Kevin Cummins expects the median dot — the average Fed official’s view for where interest rates will be by the end of the year — will have risen from 1.875 per cent, expressed in the March report, to 2.625 per cent. But he doesn’t expect it to rise much further from there in 2023 or 2024.