Federal Reserve officials continued to project near-zero interest rates at least through 2023 despite upgrading their US economic outlook and the mounting inflation worries in financial markets.

The decision, which came on a volatile day for investors with Treasury yields surging ahead of the announcement, masked a growing number of officials who saw liftoff before then, though Chair Jerome Powell stressed this was a minority view.

“The strong bulk of the committee is not showing a rate increase during this forecast period,” Powell told a virtual press conference on Wednesday, March 17, following the decision, adding that the time to talk about reducing the central bank’s asset purchases was “not yet.”

Seven of 18 officials predicted higher rates by the end of 2023 compared with five of 17 at the December meeting, showing a slightly larger group who see an earlier start than peers to the withdrawal of ultra-easy monetary policy, according to the Federal Open Market Committee quarterly economic projections issued alongside its policy statement.

“Indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak,” the FOMC said in its statement. “Inflation continues to run below 2%.”

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The Fed expects that a bump in inflation this year will be short-lived. Officials saw their preferred measure of price pressures slowing to 2% next year following a spike to 2.4% in 2021, according to the projections. Excluding food and energy, inflation is forecast to hit 2.2% this year and fall to 2% in 2022.

Ten-year Treasury yields remained near one-year highs after the statement with stocks reversing losses.

Asked about the move in yields, Powell noted that it was “important conditions continue to remain accommodative” and that he would be concerned by “disorderly markets,” repeating a line he used earlier this month.

Massive fiscal support and widening vaccinations that will help reopen the economy have buoyed investor expectations for rate increases and inflation, propelling Treasury yields higher as the Fed and federal government keep adding stimulus.

Wednesday’s decision was unanimous. – Bloomberg