Fed expects inflation to move up and stabilize.
I would have dissented. - CH
02:34 PM EDT, 06/14/2017 (MT Newswires) -- The Federal Reserve raised the target range on its benchmark lending rate by 25 basis points as expected on Wednesday, the third increase in the last five meetings, and signalled one more hike for 2017. In an eight-to-one decision the Federal Open Market Committee set the Federal funds target range at 0.75% to 1%, according to a statement. Minneapolis Fed President Neel Kashkari dissented, preferring to keep the rate unchanged. "The labor market has continued to strengthen and that economic activity has been rising moderately so far this year," the FOMC said. "Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined." The rate was last raised in March, with the FOMC citing solid job gains and a moderate pace of economic expansion. The committee opted to maintain the rate in May, seeing slowing growth in economic activity. The Fed, which targets maximum employment and price stability with an inflation aim of 2%, has long said decisions on rate hikes will be driven by data, as well financial and international events. Data released earlier initially seemed to have diminished the chances of another hike anytime soon. Retail sales declined 0.3% in May for both the nominal and core, missing expectations for a gain of 0.1% and 0.2%, respectively. Excluding sales of both autos and gas, retail sales were unchanged, below the consensus estimate for an increase of 0.3%. The consumer price index dropped 0.1% but was 0.1% higher excluding prices for food and fuel, although both were below expectations. Pantheon's Ian Shepherdson said before the decision that the CPI report wouldn't stop the Fed hiking Wednesday, but if this trend continues through the summer then the next hike, which they had been expecting in September, will be delayed. "Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely," the FOMC said. That's a change from May's statement, where the committee said it "continues to closely monitor inflation indicators and global economic and financial developments." In economic projections, members see a 2017 Fed funds rate of 1.4%, unchanged from the previous outlook given in March. That implies one more 25 basis-point hike to come this year. The median for core personal consumption expenditures inflation was lowered for this year to 1.7% from 1.9% in March and held at 2% for 2018. Growth projections for 2017 were raised to 2.2% from 2.1% predicted earlier, and 2018's outlook was maintained at 2.1%.
