Federal Reserve raises interest rates

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That implies four total rate increases this year.

According to CNBC, the Reserve released new data this week showing the GDP forecast rose to almost 3%, up from the previous predictions of 2.7%. In its statement the central bank said that "economic activity has been rising at a solid rate".

The Federal Reserve announced it will raise interest rates a quarter percentage point on Wednesday, and signaled that it could raise interest rates at least twice more this year.

The strong economic data comes just hours after the US Treasury confirmed it had taken in a record-smashing tax haul in the first fiscal months of 2018; breaking previous highs by $50 billion in personal income tax.

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


Job growth has consistently outperformed in recent years, driving unemployment down to 3.8 percent in May, the lowest reading since 2000.

It was the Fed's seventh rate increase since it began tightening credit in 2015, and it followed an increase in March this year.

Fed officials project gross domestic product increasing 2.8 percent this year, up from an earlier projection of 2.7 percent.

Fed officials and many economists worry that the low jobless rate could force employers to hike wages faster, as companies compete for workers.

In a technical move, the central bank also made a decision to set the interest rate it pays banks on excess reserves - its chief tool for moderating short-term interest rates - at just below the upper level of its target range.


The markets, however, latched on to a change in Fed policymakers' rates projections, which pointed to two additional hikes by the end of this year compared to one previously, based on board members' median forecast.

"Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability".

The Fed's pace of rate hikes for the rest of the year could end up reflecting a tug of war between a sturdy economy and the risks to growth, including from a potential trade war that could break out between the United States and such key trading partners as China, the European Union, Canada and Mexico.

The federal funds rate now sits between 1.75% and 2%. Inflation by the Fed's preferred gauge would hit its 2 percent target this year and edge up to 2.1 percent over the next two years. "The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation". More increases are expected this year but the Fed noted "readings on financial and worldwide developments" would factor into its decisions on future increases.


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