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Fed Keeps Key Interest Rate Unchanged

Signals future rate hikes
By Newser Editors and Wire Services
Posted Aug 1, 2018 2:34 PM CDT
A screen on the floor of the New York Stock Exchange shows the rate decision of the Federal Reserve, Wednesday, Aug. 1, 2018.   (AP Photo/Richard Drew)
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(Newser) – The Federal Reserve on Wednesday left its benchmark interest rate unchanged while signaling further gradual rate hikes in the months ahead as long as the economy stays healthy, the AP reports. The Fed's widely expected decision kept the central bank's key short-term rate at 1.75% to 2%—the level hit in June when the Fed boosted the rate for a second time this year. The Fed projected in June four rate hikes this year, up from three in 2017. Private economists expect the next hike to occur at the September meeting with a fourth rate hike expected in December.

The Fed's statement was upbeat on the economy, pointing to a strengthening labor market, economic activity growing at "a strong rate," and inflation that's reached the central bank's target of 2% annual gains. Analysts saw all the comments about economic strength as a clear signal that the Fed remains on track to raise rates two more times this year. There was no mention in the statement of what many economists see as one of the biggest risks at the moment: rising tariffs on billions of dollars of US exports and imports that have been imposed as a result of President Trump's new get-tough approach on trade. The Fed statement also made no reference to criticism Trump has lodged recently against the Fed's continued rate hikes.

(Read more Federal Reserve stories.)

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