Federal Reserve to raise interest rates again: moderate economic growth strong employment performance

  Local time on March 21, the Federal Open Market Committee (FOMC) meeting on interest rates this year the second statement released。 No market expectations and economists expected, the Fed FOMC meeting Powell for the first time as President chaired the Federal Reserve federal funds rate target range by 25 basis points to% to%。
This is the sixth round of the Fed to raise interest rates hike cycle, is first rate hike this year, the last rate hike in December 13 last year,。   Why the Federal Reserve to raise interest rates again?First, the US economy is currently in the "fundamentals" is the fundamental reason for the Federal Reserve to raise interest rates again in accordance with established rhythm of。 Since January this year, meeting on interest rates, the labor market continues to perform strongly, moderate economic growth。
Employment growth remains strong recent months, the unemployment rate remains low。
The latest data show that household spending and business investment in fixed assets in the fourth quarter compared with the strong growth compared to milder。 On the year, the overall inflation rate this year and excluding food and energy items, core inflation rates decline, it has been below 2%。 Overall, market-based indicators of inflation compensation remains low, almost unchanged based on longer-term inflation expectations survey indicators。   Secondly, compared to the previous few months, the US Federal Reserve to medium-term economic growth and the inflation outlook is more optimistic。 The Fed said that economic prospects have been strengthened in recent months, economic activity will moderate expansion in the medium term, inflation will rise in the next few months。 Powell chaired the first meeting of the FOMC on all participating members have to raise interest rates by 25 basis points again cast in favor。
  Once again, the Fed's main economic indicators expected this year and next, compared with December last year, "sharply for the better."。
The Fed raised its economic growth forecast for this year and next is expected next year, US economic growth was% and% respectively, compared to December of last year's forecast were raised percent and percentage points。
Meanwhile, the Fed also lowered its unemployment rate is expected to further。 Is expected by the end of 2018, the US unemployment rate will drop%, lower than the predicted value of 12% last year; by the end of 2019, the US unemployment rate will be further reduced%, well below the long-term a reasonable level%。 The Fed is expected by the end of 2018, the US core inflation rate%, consistent with the December forecast last year; by the end of 2019, the US core inflation rate%, compared to December last year raised its forecast percentage points。
  Powell said at a news conference that day, Trump government's fiscal policy has become more active, robust employment growth will boost income growth and consumer confidence, economic growth and more robust overseas, the overall financial market conditions are still relatively loose, these factors will support the improvement of the US economic outlook。
However, the US economy is to achieve and maintain a 3% growth rate is difficult。   Powell stressed that the gradual raising interest rates in line with state of the US economy, the Federal Reserve is raising interest rates to gradually tighten monetary policy further。
If the Fed were forced to future economic situation changes, was forced to raise interest rates to speed up the pace of economic growth in the US will become the "new risk"。 Powell said at a news conference to clarify that unless the US economic situation has deteriorated, otherwise no change in the Fed's balance sheet reduction plan, will continue to follow the established rhythm, amplitude, continue to "cut list"。
  For the interest rate the Fed rhythm closely watched in the coming years, the majority of FOMC members expect: 2018, 2019, 2020 respectively, the Federal Reserve will raise interest rates three times, three times, twice。
Analysts believe that the Fed's optimistic about the US economic outlook indicates that future rate hikes could accelerate the rhythm。
While most members of the FOMC is expected to raise interest rates three times in 2018, but the "Wall Street Journal" reported that, at the FOMC meeting on interest rates this year to support four times the voice added a lot more than in December last year, it is expected to raise interest rates in 2019 the number of times from December of last year, two times to three times。 "The New York Times" that, up to a trillion dollars of federal tax cuts and increased fiscal spending will stimulate US economic growth in the short term, there could prompt the Federal Reserve to raise interest rates four times this year。
After the FOMC meeting on interest rates statement released, investors generally believe that the Fed raising interest rates four times this year, at least the possibility of around 40%。