WASHINGTON-The Federal Reserve said it will raise interest rates by another quarter-percentage point and signaled it could lift them at a slightly faster pace this year to keep a strengthening economy on an even keel.
The central bank raised the federal funds rate to a 1.75-2 percent target range, the second increase under Fed Chairman Jerome Powell.
Officials penciled in a total of four rate increases for this year, up from a projection of three increases at their March meeting. US growth is also getting a boost from $1.5 trillion in tax cuts and a $300 billion increase in federal spending, with inflation at the central bank's 2 percent target for two months.More news: Right Now, NASA's Opportunity Is Battling a Potentially Deadly Martian Dust Storm
It is the seventh time the bank has raised rates since 2015.
This marks the highest level of interest rates in the United States since 2008, although the benchmark rate remains below the historical average. It's the second rate hike under Powell, a Republican appointed to lead the Fed by President TrumpDonald John TrumpWhat you need to know about Tuesday's elections Danny Tarkanian wins Nevada GOP congressional primary Laxalt, Sisolak to face off in Nevada governor's race MORE.
"Household spending has picked up while business fixed investment has continued to grow strongly", the Fed said.More news: Merkel open to European Union migration reform, cautious on eurozone
Along with rising interest rate expectations. However, the focus will be on the updated economic projections and the dot diagram, which will reveal the expectations of the number of rate hikes in the remainder of the year.
Fed policy makers now see US unemployment at 3.6 percent in the fourth quarter, followed by 3.5 percent in 2019 and 2020, based on median projections.
The Fed's short-term policy rate, a benchmark for a host of other borrowing costs, is now roughly equal to the rate of inflation, a breakthrough of sorts in the central bank's battle in recent years to return monetary policy to a normal footing. The Federal Reserve releases minutes from the March meeting of its policymakers on Wednesday, April 11. That compares with March's forecasts for 3.8 percent this year and 3.6 percent in the following two years.More news: Google will ban inline extensions starting with Chrome 71
The core PCE index, which excludes food and energy and is seen by officials as a better gauge of underlying price pressures, is forecast to reach 2 percent this year and 2.1 percent in 2019 and 2020.