Fed Raises Interest Rates by Quarter of a Percentage Point for Third Time this Year, Expects a Fourth Raise in December

September 27, 2018

The U.S. Federal Reserve decided to raise interest rates on Wednesday, as it forecasts at least three more years of growth.

In a statement about monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 percent to 2.25 percent.

The U.S. central bank still foresees another rate hike in December, three more next year, and one increase in 2020.

That would put the benchmark overnight lending rate at 3.4 percent, roughly half a percentage point above the Fed’s estimated “neutral” rate of interest, at which rates neither stimulate nor restrict the economy.

The Fed sees the economy growing at a faster-than-expected 3.1 percent this year and continuing to expand moderately for at least three more years, amid sustained low unemployment and stable inflation near its 2 percent target.

This interest rate raise is the third this year and the seventh in the last eight quarters