Fed Raises Rates and Signals Faster Pace in Coming Years

Credit AP  JACQUELYN MARTIN				“The economy is doing very well. Most people who want to find jobs are finding them,” Fed chief Jerome Powell said Wednesday

WASHINGTON-The Federal Reserve said it will raise interest rates by another quarter-percentage point and signaled it could lift them at a slightly faster pace this year to keep a strengthening economy on an even keel.

Fed officials expect to raise interest rates at least once more in 2018 and had been split on a possible fourth hike in their last meeting.

After two rate hikes in 2018, investors are focusing on the Fed's updated projections for increases during its remaining meetings for the year. "Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly".

Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 p.m. EDT (1830 GMT). Mr. Powell also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body. The projections show inflation rising 2.1% for the next three years.

Fed policy makers now see US unemployment at 3.6 percent in the fourth quarter, followed by 3.5 percent in 2019 and 2020, based on median projections.

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The committee sees further declines the unemployment.

Updating their quarterly forecasts, officials projected the policy rate at 3.1 percent at the end of 2019, according to their median estimate - compared with 2.9 percent seen in March - and 3.4 percent in 2020, unchanged from the prior forecast. It would allow the Fed to be less choreographed and more flexible in cutting or raising rates as economic conditions warrant.

We are closing into the FOMC's June policy decision and as the clocks tick closer to the decision timing, following are the expectations as forecasted by the economists and researchers of 8 major banks along with some thoughts on the future course of Fed's action. The step was needed, the Fed said, to be sure rates stay within the intended boundaries.

The policy statement bypassed discussion about the tensions over the Trump administration's trade policies, including a decision two weeks ago to impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico.

Individual Fed policymakers have expressed concerns about the economic risks of a broad tit-for-tat tariff retaliation, but have said they would not change their policies or forecasts until those risks are realized.

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