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Fed Raises Interest Rate to 1.75%-2%
As expected, the Federal Reserve raised it overnight lending rate by 0.25 point to a range of 1.75%-2%. It was the central bank’s second quarter-point increase this year.
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As expected, the Federal Reserve raised it overnight lending rate by 0.25 point to a range of 1.75%-2%.
It was the central bank’s second quarter-point increase this year. The Fed indicates it intends to raise rates two more times this year as the jobless rate declines and inflation rises faster than expected. Economists predict the rate by year-end will be at 3.1%.
The Fed predicts that unemployment, which dropped to an 18-year low of 3.8% last month, is likely to end 2018 at 3.6%, then remain at 3.5% in 2019 and 2020. The bank left unchanged its forecast for a long-term sustainable jobless rate of 4.5%.
The central bank considers a 2% inflation rate ideal. It now expects inflation will creep slightly above that level, reaching 2.1% this year and remaining at that level through 2020.
The core consumer price index, which excludes volatile food and energy, is projected to reach 2% this year and 2.1% in 2019-2020.
The Fed raised its forecast for overall economic expansion by 0.2 point to 2.8% this year. It left its prior growth forecasts for the country’s gross domestic product for 2019 and 2020 unchanged at 2.4% and 2.0%, respectively.
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