Federal Reserve hikes rates for third time this year

The Federal Reserve raised interest rates for the third time this year.The decision, which was expect...

Posted: Sep 27, 2018 9:01 AM
Updated: Sep 27, 2018 9:01 AM

The Federal Reserve raised interest rates for the third time this year.

The decision, which was expected, is a sign of increased confidence in the US economy. Unemployment is low, economic growth is strong, and inflation is relatively stable.

Policymakers under Chairman Jerome Powell unanimously agreed to raise the federal funds rate a quarter percentage point, to a range of 2% to 2.25%. The rate helps determine rates for mortgages, credit cards and other consumer borrowing.

"Our economy is strong," Powell said at a press conference on Wednesday. "These rates remain low, and my colleagues and I believe that this gradual returning to normal is helping to sustain this strong economy."

Central bankers raised expectations for a fourth rate hike in December, with a majority now in favor of such a move. In June, policymakers were split on whether the Fed should raise rates four times this year or three.

Looking ahead to 2019, Fed officials expect at least three rate hikes will be necessary, and one more in 2020.

"The Fed shows no signs of taking (a) breath in rate hikes," Robert Frick, corporate economist with Navy Federal Credit Union, wrote in a research note.

The central bank also stripped the word "accommodative" from its description of monetary policy. That may be a signal that the Fed believes interest rates are finally at a neutral level, meaning they neither stimulate nor hinder the economy.

The Fed kept rates near record lows for years to encourage growth after the financial crisis. But it has been gradually raising them over the past three years.

Daragh Maher, the head of FX strategy for the United States at HSBC, said the change in language reflects "the reality that policy can no longer be usefully described as loose."

The Fed wants to raise interest rates steadily to keep the economy from overheating, but avoid raising rates so quickly that it brings on could help start a recession.

For now, the chairman has maintained that gradual interest-rate increases are the best way to balance those risks.

Powell said that central bankers have heard a "rising chorus" of concerns from businesses about the US-China trade war. But he said that the economic impact of US tariffs is "still relatively small."

He warned that tariffs could lead to higher consumer prices, but said policymakers don't see that in the numbers just yet.

Walmart, Gap, Coca-Cola, General Motors, Macy's and other companies have said tariffs could force them to raise prices on everyday consumer goods.

The Fed raised its expectation for economic growth this year to 3.1% from 2.8%, reflecting strength in the second and current quarters.

But for 2019, Fed officials expect growth to slow to 2.5% amid worries about the growing trade rift between the United States and China. The revised estimate is slightly higher than what policy makers expected last quarter, at 2.4%.

The FOMC also gave its first look of what it expects for the economy in 2021. Policy makers anticipate economic growth will shrink to 1.8% in that year.

Investors and former Fed Chairman Ben Bernanke have warned of an economic slowdown in 2020.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 318894

Reported Deaths: 5561
CountyCasesDeaths
Marion43391855
Lake27599462
Allen18363299
Elkhart17474226
St. Joseph17071234
Hamilton13376169
Vanderburgh9839121
Tippecanoe880629
Porter844886
Johnson6556169
Hendricks6267158
Vigo618187
Monroe542850
Clark522877
Madison5153122
Delaware5014103
LaPorte474695
Kosciusko468540
Howard357977
Warrick329872
Floyd324978
Bartholomew323563
Wayne318074
Marshall308146
Cass302631
Grant282050
Noble261546
Hancock260355
Henry252837
Boone248754
Dubois242931
Dearborn222631
Jackson222534
Morgan215543
Knox189720
Shelby189556
Gibson189426
Clinton182121
DeKalb181632
Lawrence179748
Adams171022
Wabash168121
Miami166614
Daviess160144
Steuben150713
Fayette150034
Jasper147413
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Whitley140814
Ripley138515
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Putnam127828
White127522
Clay126523
Randolph126121
Posey124116
Jefferson122916
Scott112320
Greene104653
Jay100713
Sullivan99216
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Spencer8588
Perry83721
Fountain8078
Washington7837
Franklin71327
Carroll69613
Orange69028
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Owen6317
Tipton58927
Parke5886
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Martin3645
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Ohio2337
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Ohio Coronavirus Cases

Data is updated nightly.

Cases: 382743

Reported Deaths: 6274
CountyCasesDeaths
Franklin51161671
Cuyahoga37222743
Hamilton30493372
Montgomery20518236
Butler15199148
Lucas14566417
Summit13933327
Stark9193206
Warren841976
Mahoning7530300
Lake710067
Lorain6690106
Clermont593651
Delaware572537
Licking564577
Trumbull5584147
Fairfield554464
Greene538066
Clark5218101
Allen494989
Marion476759
Medina471657
Wood4598107
Miami437568
Pickaway404048
Portage358972
Columbiana357698
Tuscarawas342667
Richland328539
Wayne327394
Mercer296047
Muskingum252510
Hancock245940
Ross244559
Auglaize236435
Darke232560
Erie230268
Putnam229449
Ashtabula228354
Geauga211851
Scioto200616
Union19668
Shelby194017
Lawrence193039
Athens19134
Seneca182919
Belmont170229
Madison163119
Sandusky157729
Preble156521
Huron155519
Defiance144823
Holmes140439
Logan133517
Knox131718
Fulton128726
Jefferson128613
Crawford126817
Washington125227
Ottawa124530
Clinton109115
Williams10799
Ashland107825
Highland103718
Brown10135
Henry101323
Hardin99719
Champaign9825
Van Wert97318
Jackson96212
Fayette92717
Morrow9202
Guernsey89314
Coshocton85215
Perry82912
Adams80313
Pike7661
Gallia76513
Wyandot73217
Paulding66511
Hocking64516
Noble62224
Carroll48810
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Monroe32321
Morgan2685
Vinton2246
Harrison2193
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