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Economy in Brief

FOMC Increases Fed Funds Rate Target
by Tom Moeller  September 26, 2018

The Federal Open Market Committee voted unanimously at today's meeting to increase the federal funds rate target 25 basis points to a range between 2.00% and 2.25%. The last time the range was set this high was in April 2008. The increase was expected in the Action Economics Forecast Survey.

As indicated at the last meeting, the FOMC noted "that the labor market has continued to strengthen and that economic activity has been rising at a strong rate." Meanwhile, overall inflation and inflation less food & energy remain near the 2% objective, and longer-term inflation expectations are little changed.

Despite the strength of the economy, the Fed continued to indicate that "risks to the economic outlook appear roughly balanced."

Updated economic projections were made available at the meeting. They include real GDP growth of 3.1% this year, 2.5% in 2019, 2.0% in 2020 and 1.8% in 2021, updated from 2.8%, 2.4% and 2.0%, respectively. The 2021 projection is newly added. The expected core PCE inflation was unchanged at 2.0% this year, then steady at 2.1% thereafter. The civilian unemployment was seen at 3.7% this year, raised from 3.6%, followed by 3.5% in 2019 and 2020, then 3.7% in 2021. These jobless rate projections were updated from 3.6% and 3.5% in 2019 and 2020.

The press release for today's FOMC meeting can be found here.

The Action Economics Forecast Survey can be found in the AS1REPNA database. Haver's SURVEYS database contains the economic projections from the FOMC.

Current Last 2017 2016 2015 2014
Federal Funds Rate Target 2.00% - 2.25% 1.75% - 2.00% 1.00% 0.40% 0.13% 0.09%
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