Federal Reserve Chairman Kevin Warsh announced an expected rate hike.
“In the meeting just concluded, the FOMC decided to raise the target range for the federal funds rate by ¼ percentage point to 3¾ to 4 percent, in support of the Federal Reserve’s dual mandate,” he said. “The Committee is continuing its policy of maintaining ample reserves in the banking system.
“As noted in the Policy Statement, released just a short while ago, economic activity is expanding at a solid pace. While uncertainty remains elevated – owing, in part, to geopolitical developments – domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little. But inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2% goal. This Committee will deliver price stability.”
Warsh said the American economy appears to be strengthening.
“New hiring, private-sector earnings, business capital investment – each of these markers has improved in recent months and is pointing in a good direction. Credit flows have been robust, particularly for businesses,” he said.
He pointed out that despite the uncertainty of the geopolitical landscape; the economy has remained resilient.
“One basic sign of strength is the state of America’s labor markets,” Warsh said. “The jobless rate remains low at around 4.1 percent, and both job openings and weekly hours have been increasing. Unemployment claims, on a four-week moving average, are running at levels consistent with full employment. So, the labor side of the Fed’s congressional remit is in good shape. Yet for more than five years, inflation has been running above target. So, our predominant focus is on the price-stability side of our mandate. The plain fact is that inflation is too high and has been for too long.”
The board’s vote on the rate increase was 12-0.
