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September 6, 2019
Fed raises rates but cuts 2019 forecast
World News

Fed raises rates but cuts 2019 forecast

The Federal Reserve in Washington in August 2018Image copyright

Image caption

The Federal Reserve has been gradually raising interest rates since 2015

The Federal Reserve has raised interest rates again – but future increases may come at a slower pace.

Officials at the US central bank voted to lift the Fed’s key interest rate by 0.25%, to a target range of 2.25%-2.5%.

But estimates released on Wednesday show most members expect two rate increases in 2019 – not three, as previously forecast.

The shift follows a downturn in US financial markets and concerns about slowing growth in the US and abroad.

Officials now expect 2.3% GDP growth in 2019, down from the 2.5% they anticipated in September.

Members said they expect inflation to hover around 1.9% next year.

The Fed has been gradually raising interest rates since 2015, moving the US away from the ultra-low rates put in place during the financial crisis to spur economic activity.

Wednesday’s decision, which was widely expected, marks the ninth increase since 2015 and the fourth this year.

The moves have made borrowing more expensive. With economic growth expected to slow, some worry that further increases risk stifling economic activity.

US President Donald Trump has been among the loudest voices calling on the Fed to hold off on further increases.

Source BBC News

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