Fed Raises Interest Rates as well as also Signals 2 More Increases Are Coming
At a comparable time of low unemployment, in 2000, “wages were growing at near 4 percent year over year as well as also the Fed’s preferred measure of inflation was 2.5 percent,” both above today’s levels, Tara Sinclair, a senior fellow at the Indeed Hiring Lab, said in a research note. “Too many increases too quickly could choke the economy before we genuinely see how not bad This specific could get.”
Mr. Powell played down concerns about slow wage growth, acknowledging This specific will be “a bit of a puzzle” however suggesting that will This specific would likely normalize as the economy continued to strengthen.
The Fed chairman said growth was being lifted, at least from the short term, by tax cuts as well as also government spending increases signed into law by President Trump last year. as well as also he dismissed, for right now, concerns that will Mr. Trump’s trade policies, including tariffs on steel as well as also aluminum imports, were hurting growth, saying the Fed had yet to see any data indicating an impact.
“So right right now, we don’t see that will from the numbers at all. The economy will be very strong, the labor market will be strong, growth will be strong,” he said, adding, “I would likely put This specific down as more of a risk.”
In a statement released at the end of the two-day meeting, Fed officials noted that will economic activity had been rising “at a solid rate” — a change via their May statement, when they called the rate “moderate.” Fed officials right now expect the economy to grow at a 2.8 percent rate This specific year, up via a 2.7 percent forecast in March. The unemployment rate will be right now projected to fall to 3.6 percent by year’s end, down via a forecast of 3.8 percent in March.
“The modifications via the Fed today should not come as a surprise, given recent economic developments, however they nonetheless signal a more hawkish outlook for the next few quarters,” Eric Winograd, a senior economist at AllianceBernstein, said in a research note.