WASHINGTON (Reuters) – Growth in the US economy is moderate after the winter chill, but probably strong enough to support a rise in interest rates by the end of the year, have Wednesday suggested officials of the Federal Reserve (Fed).
The market situation continues to improve employment but unemployment nevertheless would be a little higher at year end that we thought in March. Inflation remains low but is expected to rise gradually towards the medium term objective of 2%, the Fed continued.
The press release and projections suggest that the Fed is on track to raise rates a or twice during the four meetings of monetary policy that remains to be held this year. The Fed funds rate was kept this time in the range of 0-0.25%.
“The economy is growing moderately,” the Fed wrote in a statement issued after a two-day meeting. “Job creation accelerated while the unemployment rate remained stable. Overall, a series of labor market indicators suggest that the underutilization of labor resources has diminished somewhat.”
In their projections, Fed officials lowered their expectations for growth in 2015 to 1.8% -2.0% -2.7% against 2.3% previously, to take into account the kick stopping the beginning of the year. This is the second time since December that the central bank revises down its growth projections for 2015.
For 2016, the Fed expects growth of 2.4% to 2.7% against 2 3 to 2.4% previously. In 2017, she put on a growth of 2.1% to 2.5% against 2.0 to 2.4% previously.
Fed’s Projections officials always give the Fed funds rate of about 0.625% by year end and 1.625% end 2016 below its previous projection that gave it to 1.875%.
This year, this would imply two increases of quarter point by the end of the year, the first in September, following the opinion of many analysts.
(Howard Schneider, Wilfrid Exbrayat for the French service)
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