Interest rates are going up again, thanks to a well-telegraphed Federal Reserve move Wednesday (March 21).
CNBC reported that central bankers, led by Jerome Powell in his first meeting as chairman, approved the widely expected quarter-point hike that puts the new benchmark funds rate at a target of 1.5% to 1.75%. It was the sixth rate hike since the policymaking Federal Open Market Committee began raising rates off near-zero in December 2015.
The funds rate is closely tied to consumer interest rates, which generally rise as soon as the Fed moves.
Along with the increase came another upgrade in the Fed’s economic forecast, and a hint that the path of rate hikes could be more aggressive. The market currently expects three hikes for 2018, and that remained the baseline forecast, but at least one more increase was added in the following two years.
“The economic outlook has strengthened in recent months,” the committee said in its post-meeting statement, a sentence that had not been in previous releases. The language came even though the committee said earlier in the statement that “economic activity has been rising at a moderate rate,” a seeming downgrade from January’s characterization of a “solid” rate.
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