Federal Reserve hikes rates for third time this year

The Federal Reserve raised interest rates for the third time this year.The decision, which was expect...

Posted: Sep 27, 2018 8:01 AM
Updated: Sep 27, 2018 8:01 AM

The Federal Reserve raised interest rates for the third time this year.

The decision, which was expected, is a sign of increased confidence in the US economy. Unemployment is low, economic growth is strong, and inflation is relatively stable.

Policymakers under Chairman Jerome Powell unanimously agreed to raise the federal funds rate a quarter percentage point, to a range of 2% to 2.25%. The rate helps determine rates for mortgages, credit cards and other consumer borrowing.

"Our economy is strong," Powell said at a press conference on Wednesday. "These rates remain low, and my colleagues and I believe that this gradual returning to normal is helping to sustain this strong economy."

Central bankers raised expectations for a fourth rate hike in December, with a majority now in favor of such a move. In June, policymakers were split on whether the Fed should raise rates four times this year or three.

Looking ahead to 2019, Fed officials expect at least three rate hikes will be necessary, and one more in 2020.

"The Fed shows no signs of taking (a) breath in rate hikes," Robert Frick, corporate economist with Navy Federal Credit Union, wrote in a research note.

The central bank also stripped the word "accommodative" from its description of monetary policy. That may be a signal that the Fed believes interest rates are finally at a neutral level, meaning they neither stimulate nor hinder the economy.

The Fed kept rates near record lows for years to encourage growth after the financial crisis. But it has been gradually raising them over the past three years.

Daragh Maher, the head of FX strategy for the United States at HSBC, said the change in language reflects "the reality that policy can no longer be usefully described as loose."

The Fed wants to raise interest rates steadily to keep the economy from overheating, but avoid raising rates so quickly that it brings on could help start a recession.

For now, the chairman has maintained that gradual interest-rate increases are the best way to balance those risks.

Powell said that central bankers have heard a "rising chorus" of concerns from businesses about the US-China trade war. But he said that the economic impact of US tariffs is "still relatively small."

He warned that tariffs could lead to higher consumer prices, but said policymakers don't see that in the numbers just yet.

Walmart, Gap, Coca-Cola, General Motors, Macy's and other companies have said tariffs could force them to raise prices on everyday consumer goods.

The Fed raised its expectation for economic growth this year to 3.1% from 2.8%, reflecting strength in the second and current quarters.

But for 2019, Fed officials expect growth to slow to 2.5% amid worries about the growing trade rift between the United States and China. The revised estimate is slightly higher than what policy makers expected last quarter, at 2.4%.

The FOMC also gave its first look of what it expects for the economy in 2021. Policy makers anticipate economic growth will shrink to 1.8% in that year.

Investors and former Fed Chairman Ben Bernanke have warned of an economic slowdown in 2020.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 25870

Reported Deaths: 1097
CountyConfirmedDeaths
Hennepin8738633
Ramsey3189134
Stearns204714
Nobles15585
Anoka147073
Dakota138859
Washington67033
Olmsted65411
Kandiyohi5051
Rice4802
Scott4552
Clay43529
Mower3662
Wright3322
Todd3300
Sherburne2482
Carver2242
Benton1813
Steele1670
Blue Earth1480
Martin1325
Freeborn1300
St. Louis11814
Pine900
Nicollet8810
Winona8015
Watonwan780
Cottonwood770
Carlton750
Crow Wing754
Unassigned7411
Lyon711
Otter Tail710
Goodhue704
Chisago641
Polk612
Itasca5610
Dodge530
Chippewa511
Morrison480
Le Sueur461
Meeker450
Douglas440
Becker410
Jackson400
Murray390
McLeod370
Isanti350
Waseca270
Rock230
Mille Lacs221
Pennington210
Faribault200
Swift190
Wabasha180
Beltrami180
Brown172
Fillmore171
Sibley160
Norman140
Kanabec121
Marshall120
Cass122
Pipestone120
Wilkin113
Aitkin110
Wadena100
Pope90
Koochiching90
Big Stone80
Lincoln60
Mahnomen61
Yellow Medicine60
Redwood60
Renville50
Traverse40
Grant40
Red Lake40
Clearwater30
Hubbard30
Lac qui Parle30
Roseau30
Houston20
Stevens10
Lake10
Kittson10

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 20264

Reported Deaths: 574
CountyConfirmedDeaths
Polk4406134
Woodbury281737
Black Hawk175946
Linn96779
Dallas92924
Buena Vista9181
Marshall90118
Johnson6169
Wapello60714
Muscatine56341
Crawford5422
Tama40828
Scott36810
Dubuque35121
Louisa34611
Pottawattamie29610
Sioux2900
Jasper26317
Wright1940
Washington1928
Warren1530
Plymouth1392
Allamakee1204
Story1181
Mahaska9712
Poweshiek918
Henry722
Bremer696
Boone670
Des Moines661
Clinton651
Clarke640
Taylor590
Guthrie533
Cedar491
Hamilton450
Benton441
Webster441
Monroe385
Shelby370
Jones370
Cherokee360
Marion340
Clayton343
Osceola340
Iowa330
Buchanan330
Jefferson330
Cerro Gordo301
Madison292
Lee280
Davis270
Fayette270
Dickinson270
Harrison260
Sac250
Lyon250
Monona250
Winneshiek240
Clay210
Grundy200
Mills200
Floyd191
Emmet190
Hardin190
Lucas191
Delaware191
Humboldt181
Butler171
Hancock160
Franklin150
Page140
Pocahontas140
Ida140
Keokuk140
Appanoose143
Audubon131
Jackson130
Greene130
Kossuth130
Carroll130
Chickasaw120
Cass120
Howard120
Winnebago110
Adair90
Union90
Van Buren90
Montgomery81
Adams70
Palo Alto70
Calhoun40
Fremont40
Ringgold40
Mitchell40
Worth30
Wayne10
Decatur10
Unassigned00
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