The Federal Reserve didn't increase the target range for its benchmark interest rate on Wednesday, but that doesn't mean it's done raising interest rates in 2023.
The fed funds rate was kept unchanged in a range of 5.25%-5.5% on Wednesday after the central bank raised rates in July by 0.25%. Along with its policy announcement, the Fed also released updated economic forecasts in its Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future.
Fed officials still see the fed funds rate peaking at 5.6% this year, unchanged from than the Fed's previous June projection of 5.6%.
This suggests the Fed will likely raise rates by 0.25% one more time this year.
Twelve officials see more tightening this year while seven see no increases. No officials expect to see rate cuts this year.
The Fed now plans to hold interest rates at their historically high levels for longer than previously anticipated. Fed officials now see interest rates coming down to 5.1% in 2024, higher than June's outlook for rates to finish next year at 4.6%.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
The SEP indicated the Federal Reserve sees core inflation peaking at 3.7% this year — lower than June's projection of 3.9% — before cooling to 2.6 % next year and 2.3% in 2025.
Officials see the unemployment rate rising to 3.8% this year, below the previously forecasted 4.1%. Unemployment is expected to tick slightly higher to 4.1% next year and remain at that level through 2025.
The Fed also sees stronger economic growth than initially projected, with the economy forecast to grow 2.1% this year — up from June's 1.0 % projection — before ticking dow slightly to 1.5% in 2024 and reaccelerating to 1.8% in 2025.
Josh Schafer is a reporter for Yahoo Finance.
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