The Federal Reserve on Wednesday
raised a key interest rate for the third time this year, indicating the central
bank's view that the economy is on solid ground.
"Job gains have been strong,
on average, in recent months, and the unemployment rate has stayed low.
Household spending and business fixed investment have grown strongly," the
Fed's rate-setting body said in a statement that used a variant of the word
"strong" five times.
Fed policymakers have upgraded
their assessment of the economy, with GDP growth forecast to hit 3.1 percent
for the year, up from a previous forecast of 2.8 percent, according to new
economic projections released Wednesday. Long-term GDP remains unchanged,
however, with a 2 percent growth rate expected in 2020 and later.
The Fed also expects the
unemployment rate next year to dip to 3.5 percent -- that would be the lowest
jobless rate since 1969. Inflation, on the other hand, is projected to stay
around 2 percent, said Chairman Jay Powell.
"The Fed continues to be
very much focused on strong domestic conditions and neither trade concerns nor
recent emerging market turbulence affected today's decision," Robert
Sierra, director at Fitch Ratings, said in a research note.
The target federal funds rate is
now between 2 and 2.25 percent. It is
the eighth time the Fed has hiked rates since it started to raise them in late
2015. Most economists expect the Federal Open Market Committee to again hike
rates in December.
Speaking to reporters, Powell
said a budding U.S. trade war with China and other countries has yet to have an
impact on consumers, but warned that it could eventually push up prices.
"You could see retail prices
moving up," he said. "The tariffs might provide a basis for companies
to raise prices." But, he added, "we're not seeing it yet."
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