The Latest: Fed raises short term rate for 3rd time in 2018
NEW YORK (AP) — The Latest on the Federal Reserve’s monetary policy meeting (all times local):
Federal Reserve officials voted Wednesday to raise a key, short term interest rate for the third time this year.
Investors largely expected an increase in the federal funds rate — the interest that banks charge each other — based off public statements by Fed officials. The fed funds rate was increased to a range of 2 percent to 2.25 percent, up from a level of near-zero between the end of 2008 and late 2015.
The higher range points to an improving U.S. economy with inflation staying near the Fed’s target of 2 percent. The vote to raise rates was 9 to 0.
In their statement announcing the decision, Fed officials removed a sentence in prior statements that said its interest rate policy was supporting a strong job market and a return to 2 percent inflation. By eliminating that statement, they’re suggesting that those goals are now within reach and that rate hikes will likely continue.
Financial markets held steady Wednesday as investors waited for the Federal Reserve’s latest decision on interest rate policy.
The Fed was widely expected to make the third increase this year in its benchmark short-term interest rate.
Investors will be closely watching to see what the Fed and Chairman Jerome Powell say about what’s coming next. Another increase is expected in December, with more to follow next year.
Rates are still low, but investors worry a quick jump would unsettle markets and halt what’s become the longest bull market for U.S. stocks on record.
Major U.S. stock indexes were slightly higher in morning trading, and Treasury yields were slightly lower. The yield on the 10-year Treasury note slipped to 3.09 percent from 3.10 percent a day earlier.
Financial markets are subdued as investors look ahead to the Federal Reserve’s latest policy meeting, at which it is expected to raise its main interest rate for the third time this year.
Stock markets are mixed, with Wall Street futures up a modest 0.2 percent, ahead of the meeting. The dollar is steady against major currencies like the euro and yen.
The Fed is expected to lift its key rate on Wednesday from a range of 1.75-2 percent to a still-low 2-2.25 percent. The move reflects the U.S. economy’s resilient expansion amid tax cuts and government spending. There are questions, however, whether the trade dispute could hurt the outlook.
Investors will keep an eye on a news conference by Chairman Jerome Powell for more clues to the Fed’s views.
The Federal Reserve is set Wednesday to raise interest rates for a third time this year and possibly modify the likely direction of rates in the months ahead.
The big question is whether the strong U.S. economy, which has been fueled this year by tax cuts and increased government spending, could weaken next year, especially if President Donald Trump’s trade fights begin to inflict damage and the benefits of tax cuts start to fade.
If the Fed finds that prospect likely, it might signal Wednesday that it expects to slow its rate increases next year.
The Fed’s key short-term rate now stands in a range of 1.75-2 percent after two quarter-point increases in March and June. A similar rate hike Wednesday would raise that range to a still-low 2-2.25 percent.