Global| Dec 19 2018FOMC Hikes Interest Rates
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Open Market Committee voted unanimously at today's meeting to increase the federal funds rate target by 25 basis points to a range between 2.25% and 2.50%. It was the ninth increase since December 2015. The action was [...]
The Federal Open Market Committee voted unanimously at today's meeting to increase the federal funds rate target by 25 basis points to a range between 2.25% and 2.50%. It was the ninth increase since December 2015. The action was expected in the Action Economics Forecast Survey.
Most FOMC members indicated an inclination to raise interest rates in the future. The Fed also indicated that global economic & financial developments will be monitored closely, while assessing their implications for the economic outlook, a reference it previously did not make.
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 2 percent. Indicators of longer-term inflation expectations are little changed, on balance."
Consumer price inflation, both overall and excluding food & energy, continued to be seen at 2% through 2021. Longer-term inflation expectations were seen as steady.
The Fed indicated that "risks to the economic outlook are roughly balanced."
Updated economic projections were offered at this meeting. Projections included real GDP growth of 3.0% this year, revised from 3.1%, 2.3% in 2019, revised from 2.5% and unrevised expectations of 2.0% in 2020 and 1.8% in 2021. The expected core PCE inflation rate was 1.9% this year and 2.0% thereafter, revised from 2.1%. The civilian unemployment was seen at 3.7% this year, followed by 3.5% in 2019, 3.6% in 2020 and 3.8% in 2021, revised from 3.7%.
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 | 2018 | 2017 | 2016 | 2015 | |
|---|---|---|---|---|---|---|
| Federal Funds Rate Target | 2.25% - 2.50% | 2.00% - 2.25% | 1.82% | 1.00% | 0.40% | 0.13% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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