Fed Raises Interest Rates and Signals 2 More Increases Are Coming - http://earlyretireonline.com | how to earn money fastJune 14, 2018 12:01 am
Categorised in: Breaking Financial News
At a comparable time of low unemployment, in 2000, “wages were growing at near 4 percent year over year and the Fed’s preferred measure of inflation was 2.5 percent,” both above today’s levels, Tara Sinclair, a senior fellow at the Indeed Hiring Lab, said in a research note. “Too many increases too quickly could choke the economy before we really see how good it could get.”
Mr. Powell played down concerns about slow wage growth, acknowledging it is “a bit of a puzzle” but suggesting that it would normalize as the economy continued to strengthen.
The Fed chairman said growth was being lifted, at least in the short term, by tax cuts and government spending increases signed into law by President Trump last year. And he dismissed, for now, concerns that Mr. Trump’s trade policies, including tariffs on steel and aluminum imports, were hurting growth, saying the Fed had yet to see any data indicating an impact.
“So right now, we don’t see that in the numbers at all. The economy is very strong, the labor market is strong, growth is strong,” he said, adding, “I would put it down as more of a risk.”
In a statement released at the end of the two-day meeting, Fed officials noted that economic activity had been rising “at a solid rate” — a change from their May statement, when they called the rate “moderate.” Fed officials now expect the economy to grow at a 2.8 percent rate this year, up from a 2.7 percent forecast in March. The unemployment rate is now projected to fall to 3.6 percent by year’s end, down from a forecast of 3.8 percent in March.
“The changes from the Fed today should not come as a surprise, given recent economic developments, but they nonetheless signal a more hawkish outlook for the next few quarters,” Eric Winograd, a senior economist at AllianceBernstein, said in a research note.