The Fed expects to raise rates sooner than you'd think

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a House Select Subcommittee on the Coronavirus Crisis hearing in Washington, D.C., U.S., on Sept. 23, 2020. The Fed expects to raise interest rates in 2023, according to new economic projections.

The Federal Reserve expects to raise interest rates in 2023, according to new economic projections the central bank published Wednesday.

That's a sharp contrast from the Fed's previous forecast in March, in which the central bank predicted rates would stay near zero for at least the next two years.

Some members of the Federal Open Market Committee -- which decides the central bank's policy -- are even in favor of raising interest rates next year, the projections show.

The central bank also expects stronger growth, with real gross domestic product -- the broadest measure of economic activity -- climbing 7% in 2021, up from 6.5% in the March projections. But with stronger growth comes higher inflation and the Fed has upped its 2021 inflation forecast by a whole percentage point to 3.4%, reflecting the increases in prices across the spectrum for both consumers and producers.

For now, the Fed will leave interest rates unchanged and continue its quantitative easing program, including buying at least $80 billion in Treasury securities and at least $40 billion in of mortgage-backed securities, according to its policy update Wednesday.

This is a developing story. It will be updated

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