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Fed Ends 2018 With a 4th Rate Hike

But it signals there will be fewer coming down the pike
By Kate Seamons,  Newser Staff
Posted Dec 19, 2018 1:39 PM CST
In a Nov. 29, 2018, file photo, Federal Reserve Chairman Jerome Powell addresses the Federal Reserve Board's 15th annual College Fed Challenge Finals in Washington.   (AP Photo/Cliff Owen, File)

(Newser) – The finally tally for 2018 will be four interest-rate hikes by the Federal Reserve, but the 2019 count will likely be half of that. The Fed on Wednesday announced a quarter-point increase for its key interest rate to a range of 2.25% to 2.5%. That's the highest it's been since 2008, reports the AP, and will translate into higher borrowing costs for consumers and businesses. The Fed had in September forecast three increases in 2019, but the updated forecast drops that number to two, with the long-run level decreasing from 3% to 2.75%. Wednesday's increase marks the 9th in three years, and those moves have typically been made clear weeks in advance.

That may be about to change. The Wall Street Journal notes that three-year-long "policy of 'normalization,'" in which the Fed methodically inched rates up as the economy came back to health, is coming to its close. The AP similarly reports the Fed is moving to become more "data-dependent," meaning its moves may align more closely with current economic data. Chairman Jerome Powell will shift to holding press conferences after all eight of the Fed's meetings, rather than just four, which "will allow him to explain any abrupt policy shifts. But it also raises the risk that the Fed will jolt financial markets by catching them off guard," per the AP. Reuters notes Wednesday's increase is likely to irk President Trump, who has been no fan of the increases. He tweeted on the subject on Tuesday. (Read more Federal Reserve stories.)

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