What to make of the Fed’s new projections

Downward revisions to FOMC participants’ projections for the federal funds rate have triggered a significant rally in Treasuries and taken some heat out of the dollar. But our expectation is that the Committee will raise the rate over the next few years more rapidly than policymakers, investors and the consensus of economists envisage. The upshot is that we forecast a rebound in bond yields and renewed strength in the US currency. Equities may struggle, but mainly for a different reason.