Wall Street Journal (06/17/15) Jon Hilsenrath
Despite the winter economic slowdown, the U.S. Federal Reserve has indicated that it is moving forward with interest-rate increases later this year. With the economy now firmer after a winter slump, and stronger than it has been in the last several years, Fed chairman Janet Yellen stated that conditions have reached a point where gradual increases in the target federal-funds rate are warranted.
Officials want to be sure that inflation is moving up and that there is more progress on jobs, and only gradually raising interest rates allows for that security. The Fed suggested that while it expects to start raising short-term interest rates before the end of 2015, it may only raise those rates once this year, and only by a quarter percentage point, contradicting earlier forecasts. The central bank, in economic projections supplementing the Fed’s statement, also revised down its growth estimate for 2015. While economic output was thought to be expanding by 2.3% to 2.7% in March, the latest revised estimate puts output growth at 1.8% to 2.0%.