Fed lifts rates but sticks to rate hike forecast
Main page Economics

The US Federal Reserve has lifted rates by 25 basis points but stuck to its forecast of three rate rises this year.

The latest move takes the rate to 0.75 percent to 1.00 percent.

However, the Fed did not alter its rate forecast for the rest of the year despite positive jobs, growth and inflation numbers.

US rate rise seems locked in but will the Fed signal more to come than previously forecast?

In a statement the Fed said that the 1.7 percent inflation rate was near its two percent target but the steady rise in inflation would not cause it to accelerate the pace of rate hikes this year.

The statement indicated that after almost a decade of below-target inflation the economy could cope with price rises at a more rapid pace.

Fed Chair Janet Yellen said the economy has performed as the Fed had anticipated at their last policy meeting in December.

"We have seen the economy progress over the last several months in exactly the way we anticipated," Ms Yellen said.

"We have some confidence in the path the economy is on."

The Fed projects economic growth of 2.1 percent this year, the same as its December forecast.

It also expects the unemployment situation to continue improving and forecast the jobless rate to fall from its current level of 4.7 percent to 4.5 percent and stay there through to 2019.

The median estimate of the long-run interest rate was also kept on hold at 3.0 percent.

However, the Fed did adjust its core inflation forecast, which was lifted to 1.9 percent, compared with the 1.8 percent projected in December.


Please describe the error