28 Sep Fed Hikes Interest Rates 25 Basis Points In Latest Meeting
As anticipated the Federal Reserve increased its benchmark interest rate a quarter point in its latest September meeting. The Fed also upped its anticipation for economic growth for the rest of this year and next. Policymakers of the Federal Reserve Committee increased the fed funds rate 25 basis points to a range of 2- 2.25%; it was last at this range in April 2008. This eighth increase since the Fed began normalizing policy back in December of 2015. It held at rates near zero after the recession to speed up the economic activity. The Fed removed the language in its statement that had characterized its policy as “accommodative.” Fed Chairman, Jerome Powell said at the press conference that the Fed did not have a precise estimate of where accommodation ends. It still predicts three rate hikes next year. Short term interest rates are what is most affected by Fed decisions, rates on things such as credit cards should soon rise. While mortgage rates are still rising, the strong demand for housing has meant the impact of the Fed’s decision to increase rates has minimal impact. Savers should also see their interest rates increase, though banks tend to lift these slower than they do for borrowers. Powell, head chairman, stated “Our economy is strong, growth is running a healthy clip and unemployment is low, the number of people working steadily rising and wages are up. The Fed officials raised forecasts for gross domestic product next year by 0.1 percentage points to 2.5%. For the first time, the released a projection for growth in 2021 which they predict will stand at 1.8%. FOMC members forecast one more rate hike this year, most likely to take place in December, and three more in 2019.