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22/03/2018 08:20

US Fed raises interest rates by 0.25%

[ET Net News Agency, 22 March 2018] The US Federal Reserve said information received
since the Federal Open Market Committee met in January indicates that the labor market has
continued to strengthen and that economic activity has been rising at a moderate rate.
Job gains have been strong in recent months, and the unemployment rate has stayed low.
Recent data suggest that growth rates of household spending and business fixed investment
have moderated from their strong fourth-quarter readings. On a 12-month basis, both
overall inflation and inflation for items other than food and energy have continued to run
below 2%. Market-based measures of inflation compensation have increased in recent months
but remain low; survey-based measures of longer-term inflation expectations are little
changed, on balance.
The economic outlook has strengthened in recent months. The Committee expects that, with
further gradual adjustments in the stance of monetary policy, economic activity will
expand at a moderate pace in the medium term and labor market conditions will remain
strong. Inflation on a 12-month basis is expected to move up in coming months and to
stabilize around the Committee's 2% objective over the medium term.
In view of realized and expected labor market conditions and inflation, the Committee
decided to raise the target range for the federal funds rate to 1-1/2 to 1-3/4 percent.
The stance of monetary policy remains accommodative, thereby supporting strong labor
market conditions and a sustained return to 2% inflation. The Committee expects that
economic conditions will evolve in a manner that will warrant further gradual increases in
the federal funds rate; the federal funds rate is likely to remain, for some time, below
levels that are expected to prevail in the longer run. However, the actual path of the
federal funds rate will depend on the economic outlook as informed by incoming data. (HL)

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