Economic Watch: Fed Pushes Interest Rates Higher Amid Improving Signs
Federal Reserve Chair Janet Yellen talking with reporters follwing Wednesday’s Fed announcement it is increasing interest rates. Photo: Evan Lockridge via FOMC website.
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The Federal Reserve on Wednesday increased the nation’s benchmark interest rate for the third time since its first hike in nearly a decade in December 2015, amid evidence of a steady economy and indications of more interest rate increases later this year.
The 0.25% jump in the federal funds rate (the interest rate banks charge each other for overnight loans to meet reserve requirements), pushes its target to 0.75%-1% following the previous hike in December 2016.
According to the Federal Reserve, information received since the Federal Open Market Committee met in February indicates that the labor market has continued to strengthen, that economic activity has continued to expand at a moderate pace, and that job gains have remained solid with little change in unemployment.
“Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat,” the statement said. “Inflation has increased in recent quarters, moving close to the committee’s 2% longer-run objective. Excluding energy and food prices, inflation was little changed and continued to run somewhat below 2%.”
The central bank is forecasting two more rate hikes this year, three in 2018 and at least three in 2019, to bring the federal funds rate to 3%, slightly earlier than its previous goal of 2020. Earlier some analysts were predicting there could be as many as four rate hikes in 2017.
The Fed also left its total economic growth GDP forecast nearly unchanged at 2.1% for this year and 1.9% for 2019, while projecting an unemployment rate of 4.5% for the next three years.
When asked what this and other rates hikes mean for trucking, American Trucking Associations Chief Economist Bob Costello said, “Obviously financing costs will rise with the rise in interest rates, including for equipment and loans for expansions.” But he also noted there are positives.
“Two of the biggest for …Read the rest of this story
