Published: Wed, June 13, 2018
Business | By Kate Woods

Fed raises interest rates again

Fed raises interest rates again

This report, released by Federal Reserve, includes the FOMC's projection for inflation and economic growth over the next 2 years and, more importantly, a breakdown of individual FOMC member's interest rate forecasts.

Announcing the decision to increase its target for the fed-funds rate to a range of 1.75% to 2%, the Fed described the USA jobs market as "strong" and said economic activity had been rising at "a solid rate".

The statement omitted previous language saying that the main rate would remain "for some time" below longer-run levels.

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Fed officials expect to raise interest rates at least once more in 2018 and had been split on a possible fourth hike in their last meeting.

Policy makers said in a one-page statement that the labor market "has continued to strengthen" and than economic activity "has been rising at a solid rate".

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. The Fed has signaled that it will continue to gradually increase rates in response to higher inflation and strength in the USA labor market. The step was needed, the Fed said, to be sure rates stay within the intended boundaries.

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In its updated forecasts, the Fed envisions stronger growth this year, with the economy expanding 2.8 percent, up from the 2.7 percent it predicted in March. Unemployment is already at 3.8 percent, the lowest since 2000, and the Fed believes it will fall to 3.6 percent by the end of the year, which would be the best rate since the 1960s. Not since 1969 has the jobless rate been lower. Investors had given just over a 91 percent chance of a rate rise on Wednesday, according to an analysis by CME Group. The Fed is raising rates gradually to keep the economy in check.

Interest rates are going up again as the economy gets hotter.

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