As expected the Federal Reserve raised the overnight Federal Funds rate by 25 basis points to a range of 1.75%-2%. But what was somewhat less expected was that the Fed now foresees a total of four rate hikes this year vs. previous expectations of only three. The Fed’s “dot-plot” which shows the individual members expectations, revealed that the median forecast for the Fed Funds rate by the end of 2018 is now 2.4%, up from the previous 2.1%. The forecast for three rate hikes in 2019 remained unchanged. Economic forecasts were also upgraded, with 2018 GDP going from +2.7% to +2.8%, unemployment going from 3.8% to 3.6%, and core PCE inflation going from +1.9% to +2.0%. There were numerous changes in the statement pointing to strength in the labor market, spending, investment, and the overall economy. In separate reports, inflation also appeared in producer and consumer prices in May. CPI rose from +2.6% y/y to +2.8%, the highest in six years while the core rose +0.1pp to +2.2%. PPI rose from +2.6% y/y to +3.1, the highest in over six years, and in the NFIB survey the percentage of firms raising prices reached a ten-year high.