Federal Reserve raises interest rates

After Nine Years Of US Recovery, Fed Sheds Anxieties

After Nine Years Of US Recovery, Fed Sheds Anxieties

Federal Reserve Chair Jerome "Jay" Powell said job gains are boosting income and confidence, while foreign expansion and tax cuts support additional growth.

They lifted the federal funds rate, which helps determine rates for mortgages, credit cards and other borrowing, to a range of 1.75% to 2%.

The Fed now sees gross domestic product growing 2.8 percent this year, slightly higher than previously forecast, and dipping to 2.4 percent next year, unchanged from policymakers' March projections.

Powell was speaking at a press conference after the Fed announced its decision to raise interest rates. The statement the Fed issued today after its latest policy meeting ended suggested that he does.

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This hike, which was widely expected, is the Fed's second of 2018, and the central bank signalled it is likely to do two more increases by the end of this year. Economic activity is projected to expand 2.4% in 2019, unchanged from the previous forecast; finally, the economy is expected to grow 2.0% in 2020, unchanged from the previous forecast.

We are closing into the FOMC's June policy decision and as the clocks tick closer to the decision timing, following are the expectations as forecasted by the economists and researchers of 8 major banks along with some thoughts on the future course of Fed's action.

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 3.8%, the lowest since 2000, and inflation is creeping higher. The projections show inflation rising 2.1% for the next three years.

Along with rising interest rate expectations. Consumer and business spending is powering the economy, in part a result of the tax cut President Donald Trump pushed through Congress late previous year. Not since 1969 has the jobless rate been lower. It then raised rates once in 2015, once in 2016, three times in 2017 and now twice this year.

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Fed officials have begun to debate publicly how close the economy is to overheating.

And a majority of policy makers said they now expect a total of four interest rate increases this year. Canada, the European Union and Mexico have all pledged to retaliate with tariffs on USA imports, which some studies show could cost the US close to 200,000 jobs.

A global trade war would risk cutting into US economic growth by depressing American export sales and raising inflation by making consumers and businesses pay more for imports.

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