Federal Reserve bumps up USA interest rate, signals two more in 2018

How likely US Federal Reserve rate hike could impact India

At his post-meeting press conference, Fed Chairman Jerome Powell also announced that he will hold a press conference after every policy meeting, rather than the current quarterly schedule.

The central bank raised the federal funds rate to a 1.75-2 percent target range, the second increase under Fed Chairman Jerome Powell.

"I think we are far enough away now though that the risks are kind of balanced", he said. The Fed chief now speaks to reporters after every other policy meeting.

The Fed's new projection for the pace of rate hikes shows four rate this year and three in 2019 - both unchanged from its previous forecast in March - and one in 2020, down from the two that had been projected previously. And their rate increases are addressing the "perceived threat of inflation", not an immediate inflation problem, he said.

The core PCE index, which excludes food and energy and is seen by officials as a better gauge of underlying price pressures, is forecast to reach 2 per cent this year and 2.1 per cent in 2019 and 2020. Fed Chairman Jerome Powell said at a news conference that the United States economy has strengthened considerably since the 2007-08 recession and is in "great shape".

"The economy is in great shape", Powell said.




The Fed's meeting this week is to be followed by policy meetings of two other major central banks - the European Central Bank on Thursday and the Bank of Japan on Friday. The Bank of Japan is set to leave its stimulus setting unchanged on Friday. But that exorbitant rate is likely to go up to 15.57% within two billing cycles, CompareCards says, as lenders pass along the higher rates to clients. In the longer run, it maintained the forecast for 1.8% growth. Eastern time news conference. "He is someone who thinks the USA economy has a lot of room at the margin". Ten years ago, the Fed cut interest rates to near zero in an effort to boost the economy and stem the deepening financial crisis and recession.

Announcing the decision to increase its target for the fed-funds rate to a range of 1.75% to 2%, the Fed described the USA jobs market as "strong" and said economic activity had been rising at "a solid rate".

The so-called " dot plot" released Wednesday showed eight Fed policy makers expected four or more quarter-point rate increases for the full year, compared with seven officials during the previous forecast round in March. Most officials expect the Fed would need to raise rates at least three more times next year and at least once more in 2020, leaving rates in a range between 3.25% and 3.5% by the end of 2020, the same end point officials projected in March.

Powell said there were no signs that trade tensions were having a big impact on growth and that the somewhat tighter policy path in 2018 shouldn't deter continued strong job creation.

But for now, the Atlanta Fed estimates the USA economy is roaring at a 4.6 percent rate, a level it reached only twice since the recession.

"'You have fiscal policy pushing on the gas, and downside risks from trade disputes so they are continuing their gradual approach", said Julia Coronado, president of Macropolicy Perspectives LLC in NY.

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