Interest rates will likely stay low for a while. Even though the Fed hinted at an interest rate increase this year, the market seems skeptical.
Take a look:
The dots on the chart show where the Fed thought interest rates (specifically, fed funds rates) should go. The yellow dots show projections from last December’s meeting of the Federal Open Market Committee (FOMC); the dark blue ones show updated projections that the FOMC released in March.
Note that the dark blue dots all sit below the yellow ones. This means that in March, FOMC members were, on average, less aggressive about a rate increase than they were back in December.
As Yahoo Finance reports: “Chair Janet Yellen said the Fed's new lower range for acceptable unemployment suggests that (Fed officials) are seeing more slack in the economy …”
The market is even less optimistic: the gently sloping green line indicates that traders don’t see the fed funds rate going anywhere near 3% even in 2017. In fact, the market says the fed funds rate is going to be about half of what the Fed thinks in two years: 1.7%.