(CN) – The Federal Reserve on Wednesday raised its target interest rate to a range of 1.75 percent to 2 percent, and suggested that there will be two more rate hikes in 2018.
In a statement released at 2 p.m. eastern time, the Federal Open Market Committee said the labor market has continued to strengthen since it last met in May, and that economic activity has been rising at a solid rate.
“Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly,” the statement said.
Quarterly economic projections released at the meeting showed that Fed officials expect the economy to grow at a 2.8 percent rate this year, up from a 2.7 percent forecast in March. Officials now predict the unemployment rate to dip to 3.6 percent by year’s end, down from a forecast of 3.8 percent in March.
According to Fed, on a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent. “Indicators of longer-term inflation expectations are little changed,” it said.
The committee said further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s 2 percent objective over the medium term.