What did the Fed decide on December 19, 2018?
Increasing the base interest rate by 25 basis points to the target range of 2.25% -2.50%, the Federal Open Market Committee of the US Federal Reserve commented on its decision and the current situation in the country.
The Fed notes a vigorous upturn in economic activity and a further improvement in the labor market situation due to the average growth of jobs in recent months and the remaining low unemployment rate.
The Fed states that over the period between commission meetings, family expenses continued to increase significantly, while the expansion of investments by business structures slowed compared with more forced rates earlier this year.
The Fed still assesses long-term inflation expectations as stable. At the same time, calculated on a 12-month basis, general inflation and core inflation, which do not take into account energy and food prices, remain close to 2%.
The Fed is committed, in accordance with its authority, to promote maximum employment and price stability. The Fed still expects a further gradual increase in the target interest rate range for federal funds to be in line with a steady increase in economic activity, a stronger labor market and inflation close to the symmetrical 2% target level designated by the Fed in the medium term. The Fed believes that the risks to economic prospects look fairly balanced, but it will continue to closely monitor global economic and financial processes and assess their impact on economic development trends.
Taking into account the already achieved and expected parameters of the state of the labor market and inflation, the Fed decided to raise the target interest rate range for federal funds to 2.25% -2.50%.
In determining the timing and scale of the future regulation of the target interest rate range for federal funds, the Fed will be guided by both achieved and expected economic progress in relation to its goals of maximum employment and symmetrical inflation at 2%. This approach will be based on a wide range of information, including parameters of labor market conditions, indicators of inflationary pressure and inflation expectations, financial and international events.
The current monetary policy fundamentals were adopted unanimously by 10 members of the Federal Committee on the Open Market of the US Federal Reserve.
