‘To No One’s Surprise,’ Fed Hikes Interest Rates

As predicted, the Federal Reserve followed through with its plan to hike interest rates on Sept. 26, increasing rates by a quarter point, while anticipating economic growth for the remainder of 2018 and into next year. The hike was of no surprised to anyone, said NACM Economist Chris Kuehl, Ph.D., who said the latest hike marks the eighth increase since 2015.

“The expectation is that Fed Chief Jerome Powell will reiterate the strategy touted all year: another quarter-point hike in December and perhaps three more in 2019,” Kuehl said. “The inflation threat is a little more pronounced than it was, but the bigger issue for the Fed has been trying to get rates up high enough so a future cut would make a difference. It is not that the Fed is expecting an imminent recession, but should there be one, they don’t have much ammunition with which to fight it.”

Although many economists believe economic growth will slow beginning in 2019, the Fed held its previous forecast of 1.8%, CNBC reported. Meanwhile, expectations were heightened for the next three months with a growth forecast of 3.1%. The forecast then dwindles in 2019 and 2020 to 2.5% and 2%, respectively.

President Donald Trump said at a press conference that he was displeased with the Fed’s decision to hike interest rates, saying he would “rather pay down debt or do other things, create more jobs.” Another interest rate hike is expected in December.

“I’m worried about the fact that they seem to like raising interest rates,” Trump said. “We can do other things with the money.”

—Andrew Michaels, editorial associate

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