Fed Raises Interest Rates and Signals Additional Increase in 2018 [View all]

[DonViejo]

Source: The New York Times



By Jim Tankersley
June 13, 2018

WASHINGTON — The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday and signaled it will raise rates two more times this year, a shift driven by officials’ increasingly rosy assessment of the economy.

A statement released at the end of the Fed’s two-day meeting took several steps to show officials no longer view the United States economy as primarily needing a boost from monetary policy, and are beginning to worry more about the threat of inflation.

Officials noted that economic activity has been rising “at a solid rate,” a change from their May statement, when they called the rate “moderate.” They removed a line stating that “market-based measures of inflation compensation remain low” and several sentences that expressed caution over the Fed’s future rate moves, including that “the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”

While the Fed previously telegraphed three rate increases in 2018, officials indicated they now expect a fourth rate increase before year-end, a sign of continued strength in the American economy. The expectation of an additional rate hike is the result of a single vote shifting toward more increases among the officials who comprise the Federal Open Market Committee.

Read more: https://www.nytimes.com/2018/06/13/us/politics/what-to-watch-as-federal-reserve-prepares-to-raise-interest-rates.html