US Federal Reserve hikes rates, revises estimation about GDP, unemployment


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US Federal Reserve hikes rates, revises estimation about GDP, unemployment

In the two-day meeting held between 25th-26th September, the Federal Reserve hiked the key rates as was highly anticipated in the days leading up to the meeting. The Federal Open Market Committee (FOMC) hiked the key interest rate by 25 basis points.

In order to bring about stabilisation of the country's economy, the Federal Reserve had started with their normalising policy of the rates back in December 2015. Since then, up to now, the rates have been increased eight times.

The FOMC also stated that it would be hiking the rates one more time before the end of 2018 and three further hikes have been proposed to be made in 2019. Alongside increasing the key rates, the FOMC also outlined its forecast for the American economy.

With respect to the United States' GDP, the committee members forecasted that it would grow to up to 3.1% in 2018, a relative increase from their previous estimation of 2.8% which was made in June. The estimation for 2019 was also moved upwards by around 0.1% – from 2.4% to 2.5%.

While the estimation for 2020 remained unchanged at 2%, the FOMC forecasted that the GDP would come down to 1.8% in 2021. Lastly, with respect to the estimation regarding unemployment this year, it was increased by about 0.1%, from the initial estimation of 3.6% made in June.