- July 1, 2018: Vol. 30, Number 7

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Fed increases rates in June, as outlook appears balanced

by Loretta Clodfelter

The Federal Open Market Committee raised the target federal funds rate by 0.25 percent at its meeting June 12–13. The widely expected move brought the target range for the federal funds rate to 1.75–2.0 percent.

In a statement, the FOMC pointed to both inflation and labor market conditions as supportive of the move, and noted, “Risks to the economic outlook appear roughly balanced.”

“The U.S. economy is performing in line with our expectations of above-trend growth further fueled by fiscal stimulus,” says Madhavi Bokil, a senior credit officer at Moody’s Investors Service. “We expect three to four rate hikes this year, given that the economy is continuing to add jobs at a robust pace and price pressures are gradually rising.”

The labor market has been performing strongly, with the unemployment rate falling to 3.8 percent in May. Inflation has picked

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