Fed steady, more rises likely this year
Print Edition
THE Federal Reserve on Wednesday left its benchmark interest rate unchanged while signaling further gradual rate hikes in the months ahead as long as the economy stays healthy.
The Feds widely expected decision kept the central bank’s key short-term rate at 1.75 percent to 2 percent — the level hit in June when the Fed boosted the rate for a second time this year.
The Fed projected in June four rate hikes this year, up from three in 2017. Economists expect the next hike to occur at the September meeting with a fourth rate hike expected in December.
The Fed’s statement was upbeat on the economy, pointing to a strengthening labor market, economic activity growing at “a strong rate,” and inflation that’s reached the central bank’s target of 2 percent annual gains.
Analysts saw all the comments about economic strength as a clear signal that the Fed remains on track to raise rates two more times this year.
“All signs still point to a September rate hike,” said Greg McBride, chief financial analyst at Bankrate.com. He said consumers should continue to pay down their home equity, credit card and other loans with variable rates that will rise further as the Fed keeps hiking rates.
“Refinance adjustable rate debt into fixed rates to insulate yourself from further rate hikes,” McBride recommended.
There was no mention in the statement of what many economists see as one of the biggest risks at the moment: rising tariffs on billions of dollars of US exports and imports that have been imposed as a result of President Donald Trump’s new get-tough approach on trade.
The Fed statement made no reference to criticism Trump has lodged recently against the continued hikes. The Fed’s decision was approved on a unanimous 8-0 vote. The March and June increases followed three in 2017 and one each in 2015 and 2016.
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