Fed boosts interest rates but softens 2019 plans
The economic outlook hasn't been quite as rosy lately, and so the Fed is stepping back just a bit.
The Federal Reserve raised its key interest rate Wednesday for a fourth time this year but lowered its forecast to two hikes in 2019 amid the recent stock market sell-off and uncertain growth prospects.
"The economy has continued to perform well," Fed Chairman Jerome Powell said at a news conference. But, he added, "We have seen developments that may signal some softening … In early 2018, we saw a rising trajectory for growth. Today, we see growth moderating ahead."
The central bank's latest move, which comes amid President Donald Trump's repeated criticism of Fed rate hikes, is expected to set off a domino effect across the economy, bumping up rates on credit cards, home equity lines of credit and adjustable-rate mortgages.
As expected, the Fed raised the federal funds rate – which is what banks charge each other for overnight loans – by a quarter point to a range of 2.25 to 2.5 percent. It marked the central bank's ninth hike since late 2015.
But in a statement after a two-day meeting, the Fed acknowledged a slowdown in global economic growth, the stock market's plunge and a strong dollar that's making U.S. exports more expensive for overseas customers.
The Fed "will continue to monitor global economic and financial developments and assess their implications for the economic outlook," the statement said.
Fed officials also indicated they foresee fewer rate hikes next year, estimating that only "some gradual increases" will be warranted.
The wording change reflects a central bank that now intends to respond in real time to the course the economy takes rather than follow a rate-hike road map as it has the past couple of years.
"Weaker-than-expected data, both in the United States and/or in major foreign economies, could derail further rate hikes, at least for the foreseeable future," Wells...