Federal Reserve tells Congress further rate hikes on the way
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WASHINGTON — The Federal Reserve said Friday it expects the U.S. economy will strengthen and warrant further gradual increases in its key interest rate.
That rate forecast was included in the Fed’s semi-annual monetary report to Congress, which Chair Janet Yellen will deliver to Congress next week. The Fed has raised interest rates three times since December, pushing its benchmark rate to a range of 1 per cent to 1.25 per cent. The Fed noted that policymakers still expect one more rate hike this year and another three hikes in 2018.
The Fed said this projected pace of hikes would still allow the labour market to keep strengthening and inflation to climb to the Fed’s 2 per cent target. The Fed also signalled that it expects to begin reducing its massive bond holdings this year.
The government reported Friday that employers added a bigger-than-expected 222,000 jobs in June, the most in four months. Analysts predicted the size of the June gain would keep the Fed on track to raise rates again. Many say the next rate hike will likely occur in September, after which the Fed will begin trimming its bond holdings.
