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CBO: Here’s when Fed will stop raising interest rates

Fed Funds Rate to level out at 3%

The Congressional Budget Office, which provides nonpartisan analysis for the U.S. Congress, released its 2017 Budget and Economic Outlook, which showed a forecasted nine federal funds rate hikes by the year 2020.

Wednesday, the Federal Open Markets Committee met, deciding not to raise rates again after having just raised them in the March meeting. However, housing experts explained that recent economic data supports the consensus that the Fed will raise rates in December and once more in 2017.

The CBO released a chart that shows interest rates will rise steadily, probably about three rate hikes of 25 basis points per year, and finally level out at 3% in 2020.

Click to Enlarge

Fed Funds

(Source: CBO)

The current target range for the federal funds rate stands at .75% to 1%. The chart shows once the federal funds rate hits 3% in 2020, it will hold that pace for several years, remaining at 3% at least until 2027.

While 3% is a significant increase from today’s rate, the chart shows it is still substantially lower than the pre-crisis years between 2002 and 2007.

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