Inflation pressures will remain high with the rise in commodity markets from the war.

The FOMC did raise the Funds rate by 25 basis points last week. More importantly, since they had already signaled the move, the focus was the revised forecasts they issued. The median dot plot from the individual members of the committee calls for an increase of 25 basis points at every meeting this year. That would be a total of 7 increases and take the Funds rate up 2.25% by year-end. The new dot plot also increased the members inflation expectations to above 4% for the core PCE this year. This is up from 2.7% in the dot plot issued in December. Chairman Powell admitted the Fed underestimated the inflation pressures over the last year both in magnitude and timing. They are behind the inflation curve and need to catch-up. The Fed also lowered their Real GDP growth expectations. They dropped their expectation for economic growth from 4.0% to 2.8% for 2022.