The Federal Reserve Building stands in Washington April 3, 2012. REUTERS/Joshua Roberts
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There is a serious risk that it will be, judging by the economic forecasts of the US Federal Reserve.Although forecasts are prone to errors even from the best economists, those of Janet Yellen, chairman of the Fed, and the US central bank look far too hawkish on the predicted path of interest rates; certainly far more than the market's forecasts.The Fed's median forecast, in the central bank's dot plot charts, suggest rates will rise a full percentage point a year until they hit 3.25 per cent at the end of 2018 . The market's predictions may turn out to be wrong or the Fed could change its forecasts as events unfold. However, Ms Yellen and the Fed's outlook may be too narrow and parochial, which could explain the hawkish forecasts.
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