Federal Reserve officials voted unanimously to increase the benchmark lending rate by a quarter-point to a range of 1.50% to 1.75%, in their first meeting led by Chairman Jerome Powell, who took over from former Fed chief Janet Yellen in early February. This move was largely expected by the markets and is the sixth time the U.S. Central Bank has hiked rates since the policymaking Federal Open Market Committee began raising rates off near-zero in December 2015. Citing an improved economic outlook stemming from the Trump administration’s $1.8 trillion expected fiscal stimulus – in the form of tax cuts and government spending – as well as recent signs of inflation pressure, the Fed also set expectations of a steeper path of rate hikes in 2019 and 2020. It predicted rates would be increased 3 times next year and 2 times in 2020. However, policymakers were split on whether a total of 3 or 4 rate hikes would be needed this year, where 7 officials projected at least 4 quarter-point hikes would be appropriate while 8 expected 3 or fewer increases to be warranted.
