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Federal Reserve Raises Interest Rates at First Meeting with Powell at Helm

Wednesday, Mar 21 2018
Federal Reserve Raises Interest Rates at First Meeting with Powell at Helm

The Federal Reserve raised interest rates by a quarter point on Wednesday, its first rate hike this year, in a decision that was widely anticipated by markets. The Federal Open Market Committee increased the overnight funds rate to a range of 1.5% to 1.75% in its first meeting with newly-installed Chairman Jerome Powell at the helm. Futures traders had seen an around 90% chance of a rate increase ahead of the meeting, according to Investing.com’s Fed Rate Monitor Tool.

Members of the rate-setting committee stuck to their median forecast for a total of three rate hikes in 2018, but revised upward their interest-rate projections for both 2019 and 2020. The central bank sees interest rates in 2019 at 2.9%, up from a prior forecast of 2.7%, while interest rates in 2020 are expected rise to 3.4%, up from a prior estimate of 3.1%. “No fourth dot for 2018, but it’s coming, soon,” said research firm Pantheon. The research firm added that “only one FOMC member needs to add another hike to their 2018 profile to raise the median to four hikes this year. In a sign of confidence in the U.S. economy, members of the rate-setting committee raised their economic growth projection for this year, forecasting U.S. economic growth of 2.7% in 2018, a 0.2% increase from the previous projection of 2.5% in December.

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