Federal Reserve raises USA interest rates again

Galtero Lara
Junio 13, 2018

And a majority of policy makers said they now expect a total of four interest rate increases this year.

Fed drops reference from previous statements that it expected rates to be below neutral rate for "some time".

It's the second rate increase of this year and Fed officials anticipate one or two additional hikes before 2019.

The Fed announced the rate rise at the close of a two-day meeting in Washington. Should the Fed's expectations prove accurate, its rate policy would then be meant to slow the economy. While the national economy appears to be on solid ground for 2018, the Fed must now consider how growing global trade disputes could slow US growth. The step was needed, the Fed said, to be sure rates stay within the intended boundaries.

Fed says further gradual rate increases will be consistent with sustained economic growth, strong labor market and inflation near 2 percent over medium term. Unemployment is 3.8%, the lowest since 2000, and inflation is creeping higher. For 2020, the Fed foresees a median rate of 3.4 percent.

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United States unemployment dropped to 3.8% in May, its lowest level since April 2000 and one of the lowest levels since the second world war. The unemployment rate is seen falling to 3.6 percent in 2018, compared to the 3.8 percent forecast in March. "Economic activity has been rising at a solid rate".

The Fed aims to achieve its mandates of maximizing employment and stabilizing prices by lowering rates to spur growth during times of economic weakness and raising rates to slow growth if the economy threatens to overheat.

Rates for conventional mortgages are likely to see more gradual change.

Fed says raises interest on excess reserves rate to 1.95 pct from 1.75 pct.

Trump's imposition of tariffs on steel and aluminum imports has enraged US allies. Officials have also set in motion a plan to reduce the Fed's bond holdings, as the central bank moves away from accommodative policies employed during and after the 2008 financial crisis.

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