Federal Reserve Board Chairman Jerome Powell speaks at the Economic Club of New York on November 28, 2018. On Wednesday the Fed's Federal Open Market Committee raised benchmark interest rates by one-quarter point. File Photo by John Angelillo/UPI | License Photo
Dec. 19 (UPI) -- The Federal Reserve raised its benchmark interest rate one-quarter point, to 2.5 percent, on Wednesday.
It is the fourth rate increase in 2018 and the ninth since the beginning of normalization of rates in December 2015. In a statement, the Federal Open Market Committee said two more rate adjustments, presumably increases, could be expected in 2019.
"The Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions and inflation near the Committee's symmetric two percent objective," the statement read in part.
The committee added that it intends to slow the pace of upcoming interest rate increases, noting economic growth concerns and global financial developments.
The committee also lowered its outlook for the long-term funds rate. Earlier predictions of 3 percent are now 2.8 percent, with its 2019 estimate declining from 3.1 percent to 2.8 percent, and the 2020 and 2021 outlook changed from 3.4 percent to 3.1 percent. The funds rate is closely tied to consumer debt such as credit card and adjustable-rate loans. Wednesday's decision will affect all forms of borrowing.
The rate increases in 2018 were in part responsible for the average 30-year mortgage rate in the United States to climb from 3.95 percent in early 2018 to nearly 5 percent in November, a seven-year high.
Wednesday's increase comes as some economists predict a softening economy and a global recession in 2019. President Donald Trump has been critical of any rate increases, singling out Jerome Powell, Fed chairman, in attacks.
"My biggest threat is the Fed," Trump said in an October interview with the Fox Business Network in October. "because the Fed is raising rates too fast, and it's too independent."
On Monday he again attempted to stop an interest rate increase in a Twitter message.