Fed raises rates to highest level in 10 years

The Federal Open Market Committee (FOMC), at the close of its two-day policy-setting meeting Wednesday, said it will increase the federal funds target rate by a quarter-point to a range of 1.5 to 1.75 percent. This widely expected move – anticipated by NAFCU – lifts rates to a level last seen in 2008.

The committee, in its release, said the “stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.”

“As anticipated, the FOMC initiated its first rate hike of the year,” said NAFCU Chief Economist and Vice President of Research Curt Long. “In addition, the Fed’s latest projection shows markedly higher expectations for economic growth and lower expectations for the unemployment rate in 2018 and 2019. The inflation forecast increased only slightly.”

The median rate forecast for 2018 continues to call for three hikes overall (including the March move), but seven of the 15 committee participants now expect four or more rate hikes this year.

 

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