Tuesday, June 19, 2018

Federal Reserve raises interest rates

By on June 13, 2018

SAN JUAN – The Federal Reserve said Wednesday that “in view of realized and expected labor market conditions and inflation, the [Federal Open Market] Committee decided to raise the target range for the federal funds rate to 1-3/4 [1.75] to 2 percent.”

The stance of monetary policy “remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation,” the Fed added.

Basing the move on the U.S. labor market’s strengthening and rising economic activity, as well as household spending, which “has picked up, while business fixed investment has continued to grow strongly,” the Fed raised the benchmark interest rate again this year.

“On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent. Indicators of longer-term inflation expectations are little changed, on balance,” it added.

The Fed said further gradual increases “in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.”

Fed Chairman Jerome Powell (Screen capture of www.c-span.org)

In determining the timing and size of future adjustments–which the committee may make four of by the end of the year this year, three in 2019 and one in 2020–it said it will take into account “measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Link to Federal Reserve Board and Federal Open Market Committee economic projections from June 12-13 meeting.

 

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