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Fed Makes 2nd Rate Hike of 2018, Pointing to Stronger Labor Market and Economic Activity
Thursday, June 14, 2018 6:45 AM

At the close of its two-day policy-setting meeting Wednesday, the Federal Open Market Committee, said it will increase the federal funds target rate by a quarter-point to a range of 1.75 to 2 percent. In its release, the Fed said that the "labor market has continued to strengthen and that economic activity has been rising at a solid rate."

The FOMC also said that on a "12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent. Indicators of longer-term inflation expectations are little changed, on balance."

The Fed indicated it will continue reducing its securities holdings by decreasing its reinvestment of the principal payments from its holdings of Treasury securities and agency mortgage-backed securities. In accordance with the addendum released June 2017, reinvestment will be trimmed $30 billion this month. Effective in July, the amount of balance sheet reduction will increase to $40 billion per month.

The FOMC will meet again July 31-Aug. 1.