9/26/2018, 8:01 PM (Source: TeleTrader)
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Fed boosts target interest rate range to 2%–2.5%

The monetary policy panel led by Chair Jerome Powell decided to increase the benchmark for borrowing costs in the United States to a level last seen more than ten years ago. The statement published on Wednesday showed the Fed funds target range was raised by 25 basis points to between 2% and 2.25%.

Furthermore, it left out the statement that its policy is "accommodative," which was repeated in monetary policy updates for years. The change indicates a hawkish bias, meaning rate-setters in the Federal Reserve are shifting to aim at levels that are neutral instead of stimulative. The decision was unanimous.

Economic growth is seen by policymakers at 3.1% for this year, after they predicted 2.8% in June. The number of officials on the Federal Open Market Committee expecting one more quarter-point increase in the headline rate rose to 12 out of 16, compared to eight in the previous so-called dot plot. The projection for next year was unchanged at three equivalent moves. The increase in the gross domestic product was estimated at 1.8% for 2021, down by 0.2 percentage points from 2020. The unemployment rate is predicted to grow by 0.2 points to 3.7% as the median interest rate is set at a flat 3.4%.

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