Fed Raises Rates, Sees Four Rate Hikes In 2018

(RTTNews) - The Federal Reserve on Wednesday raised its key interest rate by a quarter point to 2%, as expected.

In a surprise move, the central bank now projects four interest rate hikes in 2018, rather than three. The Fed also dropped wording about rates being 'below levels" in the long run.

The vote was 8-0.

"Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined," the Fed's statement read.

On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.

Fed officials now see the unemployment rate falling further to an astounding 3.5% in 2019 and 2020. However, they see GDP growth sliding to 2.4% in 2019 and back to 2% in 2020.