The Federal Reserve is moving forward with another planned interest rate increase.
Reserve Board Chairman Jerome Powell said Wednesday the Fed’s decision reflects steady economic growth and strength in the US job market.
The 1/4 percent increase is the second scheduled rate increase this year, and while that means you may pay a bit more interest on credit cards and loans, it is actually a reflection of a strong US economy.
Powell says the economy is in a lot better shape than when he first came to the Federal Reserve in 2012.
“The economy is in a very different place. Unemployment was 10 percent at the height of the crisis, it’s at three point eight percent now and moving lower. So really the decision you see today is another sign that the US economy is in great shape,” he said.
Powell said the economy is strong and inflation is close to the federal target of two percent.
The biggest concern right now is fuel prices. President Trump expressed concern about Americans paying more at the gasoline pump just as summer vacations get underway.
The president tweeted Wednesday: “oil prices are too high, OPEC is at it again. not good!” OPEC is the Organization of Petroleum Exporting Countries. The organization includes the countries of Saudi Arabia, Venezuela and Iran.
The job market remains strong and more jobs are now available than there are people to fill them. US manufacturing is also strong with statistics showing a sharp expansion in output and new orders.
Also, Powell said he sees no indication that recent trade disputes with Europe and Canada over steel and aluminum tariffs are hurting the economic outlook.
The interest rate increase is the Fed’s seventh since it started tightening credit in 2015 – efforts that help keep inflation in check.
“We’ve been very, very careful not to tighten too quickly. I think we’ve been patient and I think patience has born fruit and I think it continues to,” the Fed chairman explained.
The Federal Reserve now suggests two more rate increase may come later this year.