Fed Raises Rates, Sticks to Forecast for 2018 Increases

Policy makers pencil in three quarter-point rate raises for next year, as they had in September.

The Federal Reserve showed continued optimism about the U.S. economy in voting Wednesday to raise short-term interest rates for the third time this year, and signaling it would stay on a similar path next year amid a leadership transition.

Officials nudged their economic-growth estimates higher for the next few years on expectations that congressional Republicans will pass tax cuts. But the Fed policy makers’ new projections suggest the boost wouldn’t be so large that they would have to speed up the pace of rate increases to guard against too much inflation.

“At the moment the U.S. economy is performing well,” Fed Chairwoman Janet Yellen said at a press conference after the central bank’s two-day policy meeting ended Wednesday.

“The growth that we’re seeing, it’s not based on, for example, an unsustainable buildup of debt,” she added. “The global economy is doing well. We’re in a synchronized expansion. This is the first time in many years we’ve seen this.”

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