WASHINGTON – The United States Federal Reserve raised on Wednesday its benchmark interest rate by a quarter point to a range of between 1.75 percent and 2 percent, a move that shows its continued confidence in the US economy.
The central bank also said it expected to raise the federal funds rate two more times before year’s end.
“Information received since ... May indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate,” the Fed said in a statement at the end of a two-day meeting of its policy-making body, the Federal Open Market Committee.
The vote to lift the target range was a unanimous 8-0.
The Federal Reserve raised its growth estimate for this year to 2.8 percent, up from 2.7 percent in March; it also increased its 2018 inflation rate forecast to 2.1 percent, compared with 1.9 percent three months ago.
The Fed is continuing to project 2.4 percent growth in 2019, unchanged from March, while it now expects next year’s inflation rate to come in at 2.1 percent, compared with 2 percent in the March projection.
The unemployment rate is projected to stand at 3.6 percent at the end of this year and at 3.5 percent in 2019, levels that are consistent with full employment.
“The main takeaway is that the economy is doing very well,” Federal Reserve Chairman Jerome Powell said at a press conference to discuss the rate hike and the new economic projections.
“Most people who want to find jobs are finding them, and unemployment and inflation are low. Interest rates have been low for some years while the economy has been recovering from the financial crisis,” he added.
Gradually raising interest rates to a more normal level is the “best way the Fed can help sustain an environment in which American households and businesses can thrive,” Powell said.