Federal Reserve Raises Rates, as Leadership Change Nears

In the final meeting of 2017, the Federal Reserve said it would increase its benchmark federal-funds rate by a quarter percentage point to a range between 1.25 percent and 1.5 percent. Officials raised their projections for economic growth and said they expect to keep lifting rates if the economy performs in line with their forecast, according to a Wall Street Journal article on Wednesday, December 13th.

"Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further," the Federal Open Market Committee (FOMC) said in a statement Wednesday following a two-day meeting in Washington. Inflation will remain below the Federal Reserve's 2 percent goal in the near term but "stabilize" around the target in the medium term, the central bank said.

The 7-2 vote for the rate move, the Federal Reserve's third this year, saw Chicago Fed President Charles Evans join Minneapolis Fed President Neel Kashkari in casting dissenting votes because they wanted to hold rates steady.

With Jerome Powell set to take the reins, the Federal Reserve Board (FRB) officials penciled in three quarter-point rate increases for next year, as they had in September, and two increases each in 2019 and 2020. FRB Chair Yellen is expected to chair the committee's next meeting on January 30-31, 2018 for what will be her last FOMC gathering of her time on the committee spanning three decades as Chair, Vice Chair, and San Francisco Fed president and governor.

The FRB's course in 2018 will be charted under new leadership, led by Jerome Powell and a pair of new FRB governors (Randal K. Quarles, already installed as the vice chairman of supervision, and Marvin Goodfriend, who is awaiting Senate confirmation). Three more of the seven seats on the Federal Reserve's board remain open and ready for President Trump to fill.

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