What do you think the Fed is planning for its next meeting on June 15?
Based on comments from various senior Fed officials’ speeches, the Fed is expected to hike the
federal fund rate by 50 basis points to 1.375%. This will be the third hike in this cycle.
In March, the Fed’s projection of the 2022 year-end federal funds rate was 1.90%. Again, based on comments from speeches, the Fed’s expected updated projection to be released at the meeting is expected to show the federal funds rate at year-end will be around 2.5%. This rate will be close to the Fed’s neutral rate of 2.375%. The neutral rate is a model-driven rate that is believed to not add stimulus to the economy nor restrain it. Some people refer to it as the Goldilocks rate; not too soft, not too tight.