Fed Hikes Interest Rates for Third Time in 2018, Signals More Hikes to Come

The Federal Reserve raised interest rates on Wednesday and signaled that additional increases were on the way this year and next.

The Fed removed language in its statement announcing the rate hike that described its monetary policy as “accommodative,” signaling that the economy is strong enough to grow without help from the central bank.

Wednesday’s rate hike was the third this year and the eighth since the Fed began raising interest rates in December 2015. The latest raise brings the Fed’s overnight target to a range of 2.0 to 2.25 percent. This is the first time since before the financial crisis that the Fed’s target has been above 2 percent. The Fed is widely expected to raise rates again in December.

The Fed’s policy of gradually raising rates has attracted the ire of President Donald Trump, who has said he disagrees with the policy but has no plans to interfere with the independence of the central bank. Trump has complained that raising interest rates works against his efforts to grow the economy at a faster clip.

“I don’t like all this work that we’re putting into the economy and then I see rates going up,” Trump said in July. “I am not happy about it. But at the same time I’m letting them do what they feel is best.”

He also tweeted his disapproval:

Trump’s criticism of the Fed harkened back to the Reagan era, when Ronald Reagan and his aides were frequently at odds with then-Fed chairman Paul Volcker. Some of Reagan’s supporters even wanted Volcker impeached because they believed his tight monetary policy was choking off the economy and undermining administration’s tax cuts.

The Fed’s statement describes U.S. economic conditions as “strong” a number of times.

“Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending and business fixed investment have grown strongly,” the Fed said.

In addition to its formal statement, the Fed released the economic projections of the members of its Federal Open Markets Committee. Those show that the Fed’s policymakers think it will raise rates five more times by the end of 2020, which bring rates up to a range of 3.25 to 4.25 percent.