The Federal Reserve announced on Wednesday that it had opted to raise interest rates for the second time this year, as Chairman Jerome Powell praised the nation’s economic health in a post-decision press conference.
The Federal Open Market Committee voted to increase the target range for the federal funds rate from 1.75% to 2%, the seventh hike since late 2015. The Fed also announced that it expects there to be two more rate hikes before the end of this year — one more hike than its March estimate.
Aside from rising economic activity, Powell and the FOMC touted the nation’s declining unemployment rate, growing household spending and increased business investment. Additionally, in the past year, overall inflation has moved close to 2%, according to the FOMC.
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability,” the FOMC said in a statement. “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective over the medium term. Risks to the economic outlook appear roughly balanced.”
Powell stated during the conference that beginning in 2019, the Fed will hold briefings after ever policy decision, rather than quarterly.
As a result of the hike, consumers can expect to see increased borrowing costs for credit cards, mortgages, and auto loans. On the plus side, however, the higher rates allow savers to earn more interest on deposits.