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| Fed Raises Rates Again, Citing ‘Particularly Bright’ Economic Moment | Fed Raises Rates Again, Citing ‘Particularly Bright’ Economic Moment |
| (about 2 hours later) | |
| WASHINGTON — The Federal Reserve, as expected, raised its benchmark interest rate by one-quarter of a percentage point on Wednesday, and indicated it plans to raise rates again in December. | |
| The Fed repeatedly described economic conditions as “strong” in a statement following a two-day meeting of its Federal Open Market Committee, which sets monetary policy. | The Fed repeatedly described economic conditions as “strong” in a statement following a two-day meeting of its Federal Open Market Committee, which sets monetary policy. |
| “Economic activity has been rising at a strong rate,” the statement said, adding that job growth, and the growth of household spending and business investment, were also robust. | “Economic activity has been rising at a strong rate,” the statement said, adding that job growth, and the growth of household spending and business investment, were also robust. |
| The Fed moved its benchmark rate up to a range between 2 and 2.25 percent. It is the eighth time since the 2008 financial crisis that the Fed has raised rates, and the third time this year. The decision was unanimous. | The Fed moved its benchmark rate up to a range between 2 and 2.25 percent. It is the eighth time since the 2008 financial crisis that the Fed has raised rates, and the third time this year. The decision was unanimous. |
| The Fed chairman, Jerome H. Powell, speaking at a news conference, said that “it’s a particularly bright moment” for the United States economy but acknowledged that, while growth is strong and unemployment is low, the returns have not been felt evenly. | |
| “The benefits of this strong economy have not reached all Americans,” he said, adding that the Fed was not seeking to check growth by raising rates. | “The benefits of this strong economy have not reached all Americans,” he said, adding that the Fed was not seeking to check growth by raising rates. |
| “My colleagues and I are doing all we can to keep the economy strong, healthy and moving forward,” Mr. Powell said. | “My colleagues and I are doing all we can to keep the economy strong, healthy and moving forward,” Mr. Powell said. |
| For the first time in recent years, the Fed did not describe monetary policy as “accommodative,” indicating that its benchmark interest rate is rising back to a level that the Fed regards as neutral, meaning monetary policy is neither stimulating nor restraining economic growth. | For the first time in recent years, the Fed did not describe monetary policy as “accommodative,” indicating that its benchmark interest rate is rising back to a level that the Fed regards as neutral, meaning monetary policy is neither stimulating nor restraining economic growth. |
| That does not mean the Fed is done raising rates. Fed officials warned last year that there was no need for a tax cut in the midst of a steady economic expansion. President Trump and Congress ignored that advice, cutting taxes and increasing spending. The result has been a short-term increase in economic growth, which has reinforced the Fed’s conviction that it needs to continue raising interest rates to maintain control of inflation, which is rising at roughly a 2 percent annual pace. | That does not mean the Fed is done raising rates. Fed officials warned last year that there was no need for a tax cut in the midst of a steady economic expansion. President Trump and Congress ignored that advice, cutting taxes and increasing spending. The result has been a short-term increase in economic growth, which has reinforced the Fed’s conviction that it needs to continue raising interest rates to maintain control of inflation, which is rising at roughly a 2 percent annual pace. |
| In a new round of forecasts the Fed published Wednesday, members of the policymaking committee predicted the central bank would raise rates five more times by the end of 2020. | In a new round of forecasts the Fed published Wednesday, members of the policymaking committee predicted the central bank would raise rates five more times by the end of 2020. |
| Mr. Trump has publicly bemoaned the higher rates. “I don’t like all this work that we’re putting into the economy and then I see rates going up,” he told CNBC in July. “I am not happy about it.” | Mr. Trump has publicly bemoaned the higher rates. “I don’t like all this work that we’re putting into the economy and then I see rates going up,” he told CNBC in July. “I am not happy about it.” |
| So far, however, there is little sign the Fed is crimping economic growth. Rates paid by consumers have climbed more slowly than the benchmark rate. The average rate on a 30-year mortgage loan, for example, reached 4.55 percent in August, up from 3.96 percent in December 2015, according to Freddie Mac. That is less than a third of the increase in the Fed rate over the same period. | So far, however, there is little sign the Fed is crimping economic growth. Rates paid by consumers have climbed more slowly than the benchmark rate. The average rate on a 30-year mortgage loan, for example, reached 4.55 percent in August, up from 3.96 percent in December 2015, according to Freddie Mac. That is less than a third of the increase in the Fed rate over the same period. |
| Mr. Powell, asked about Mr. Trump’s displeasure with rate increases, said the Fed was carrying out its mission and that “we don’t consider political factors.” | Mr. Powell, asked about Mr. Trump’s displeasure with rate increases, said the Fed was carrying out its mission and that “we don’t consider political factors.” |
| The jobless rate also continues to drop and the Fed now expects it to reach 3.7 percent in 2018, the lowest level since 2000. | The jobless rate also continues to drop and the Fed now expects it to reach 3.7 percent in 2018, the lowest level since 2000. |