Officials of the Federal Reserve voted to raise the central bank’s interest rate target on Wednesday which is the fourth such increase this year, however, they signaled a slower rate increase in the upcoming year. According to the central bank, a slowdown in economic growth is expected in 2019 and has updated its expectations for next year.
The Federal Reserve Chairmen, Jerome Powell, released a statement at a press conference addressing Americans concerns, “over the past year the economy has been growing at a strong pace, the unemployment rate has been near record lows, and inflation has been low and stable. All of those things remain true today.”
President Trump has routinely criticized the central bank’s decision to proceed with an interest rate hike, citing concerns of slowing the economic recovery that American’s desperately needed.
Previous President’s have steered clear of criticizing the Federal Reserve as to not tie their political careers to that of a fluctuating market, however, President Trump was vocal on social media denouncing the move to raise rates. He took to Twitter to express his frustration with the interest rate increases and questioned why they wanted to take the chance of slowing down the economy.
I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!
— Donald J. Trump (@realDonaldTrump) December 18, 2018
The Fed raised rates a quarter of a percentage point with an upward limit of 2.5% for the near term and also downgraded future economic growth to 3%. During the campaign, President Trump ran on a 3% growth promise which remains a good growth model.
Chairmen Powell explained the need for the interest rate hike in response to growing inflation fears and a lack of interest rate increases from the housing crisis in 2008. Powell claims interest rates “are still low by historical standards” and may only see one or two increases in 2019. He would like to see these gradual rate hikes become a more normalized action as long as the economy continues on a positive economic growth forecast.
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