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Federal Reserve Signals Interest Rate Increase as Inflation Raises

WASHINGTON (Sputnik) - The Federal Reserve predicted with 90 percent certainty it would raise interest rates in June while leaving rates unchanged in May, according to minutes of a May 1-2 meeting of the US central bank’s Federal Open Market Committee (FOMC) released on Wednesday.
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"The probability of an increase in the target range for the federal funds rate occurring at the May FOMC meeting, as implied by quotes on federal funds futures contracts, remained close to zero," the minutes stated. "The probability of an increase at the June FOMC meeting rose to about 90 percent by the end of the inter-meeting period."

The FOMC voted unanimously to leave the benchmark federal funds rate — the rate on overnight lending of excess reserves between banks and credit unions — unchanged at 1.5 to 1.75 percent, the minutes said.

The minutes also noted that near-term inflation projections were "revised-up slightly" based on the latest data to near 2 percent, the Federal Reserve’s long-term target.

Meeting participants also agreed that information received since the previous March meeting indicated that the US labor market had continued to strengthen and economic activity had risen at a moderate rate, according to the minutes.

An interest rate increase to the present level in March was the first under Chairman Jerome Powell, who succeeded Janet Yellen.

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