On Wednesday, the Federal Reserve announced it would raise interest rates, from 1.75 percent to 2 percent. The move was widely expected due to the strengthening economy and low unemployment.
The Fed also announced Wednesday that it expects to implement two additional rate hikes in the next six months, and adjusted its projections for several other key economic variables. The Fed is now projecting economic growth of 2.8 percent in 2018 (an increase from its previous projection of 2.7 percent), the unemployment rate to hit 3.6 percent by the end of year, and inflation to hit 2.1 percent.
At a news conference, Jerome Powell, the chairman of the Federal Reserve, commented on the economy’s current strength, saying that “[t]he main takeaway is that the economy is doing very well. Most people who want to find jobs are finding them.” Powell also described the persistently slow wage growth that has plagued the economy in recent years as “a puzzle.”
“Everywhere we go we hear about labor shortages, but where are the wages?” Powell said at the news conference. “It’s a bit of a puzzle.” Powell indicated he expects wage growth to pick up as the economy continues to strengthen.
