Fed announces interest rate decision

by Ryan Smith26 Sep 2018

As market observers predicted, the Federal Reserve announced today that it was raising the federal benchmark interest rate a quarter-point.

“In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 2 to 2 ¼ percent,” the Federal Open Market Committee said in a statement.

The FOMC cited “sustained expansion of economic activity, strong labor market conditions, and inflation neat the Committee’s symmetric 2 percent objective” as reasons for the hike.

The rate increase is the third hike this year; the Fed also raised rates in March and June. Most observers expect a fourth hike before the end of 2018.

The rate hike came as no surprise to economists and other market experts. A CNBC survey found that 98% of respondents expected the Fed to hike rates this month, while 96% predict another quarter-point hike in December.

“Fed funds increases in September and December are as certain as can be,” John Donaldson, director of fixed income at Haverford Trust, told CNBC. “Their real challenge starts after the first increase in 2019, which will bring the rate to 2.75%, or finally back even to inflation.”