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Economy in Brief

FOMC Increases Rates As Economy Strengthens
by Tom Moeller  December 14, 2016

At today's meeting of the Federal Open Market Committee, the targeted fed funds rate was raised to between 0.50% and 0.75%, from 0.25% to 0.50%. It was the highest target since the end of 2008. The FOMC indicated that an improved economic outlook likely would cause the fed funds rate to rise another 0.75 percentage points next year.

The Fed indicated that solid job gains and a lower unemployment rate have accompanied moderate growth in consumer spending. Business investment remains soft. It noted that inflation has increased this year, but remains below the 2% long-run objective.

Moderate economic growth was expected to continue, as labor markets strengthen further. Inflation is expected to rise to 2% as the effects of lower energy prices dissipate.   

The Fed expects 2.1% growth in real GDP next year followed by 2.0% growth in 2018 and 1.9% in 2019. A 4.5% unemployment rate is expected for all three years. Core PCE inflation of 1.8% next year was expected to be followed by 2.0% growth in 2018 and 2019. 

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

Haver's SURVEYS database contains the economic projections from the Federal Reserve Board.

Current Last 2015 2014 2013 2012
Federal Funds Rate Target 0.50%-0.75% 0.25%-0.50% 0.13% 0.09% 0.11% 0.14%
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