The federal government drastically upgraded its forecasted 2018 economic outlook Wednesday, saying the United States economy was rising at a "solid" rate; an increase from its previous prediction of "moderate" growth.
But he said "having twice as many press conferences does not signal anything about the timing or the pace of interest rate changes". The jobless rate is already the lowest since 2000. "The Fed is prepared to be quicker about pushing rates higher".
Powell said officials have "been very, very careful not to tighten too quickly", adding that continuing with their gradual approach to policy seems "like the right thing" to do.
This was the seventh rate hike since late 2015, when the Fed first began lifting interest rates from nearly zero.
More than today's rate hike, the gold market is reacting to the Federal Reserve's guidance on future interest rates.
"The labour market has continued to strengthen. economic activity has been rising at a solid rate", the central bank's rate-setting Federal Open Market Committee said in its unanimous statement after the end of a two-day meeting.
That also means cardholders soon will be forking over even more money in interest payments annually, an estimated $2.2 billion alone for what's expected to be the Federal Reserve's second rate hike of the year, according to the June Credit Card Debt Report from CompareCards.
In addition to a new dot plot, the Fed updated its forecasts for economic growth and inflation. The Fed's preferred price gauge - the Commerce Department's personal consumption expenditures index - rose 2 per cent from a year earlier in March and April, after spending most of the past six years below it.
The Fed expects inflation to overshoot its target faster than it previously thought, prompting it to raise its forecast for rate hikes this year.
That is a welcome step-up from the roughly 2-percent growth averaged throughout the recovery, which was plagued by a series of crises overseas and uncertainties at home, delaying the Fed's tightening plans.
Federal Reserve Chair Jerome "Jay" Powell said job gains are boosting income and confidence, while foreign expansion and tax cuts support additional growth. Fed officials repeated their assessment that "risks to the economic outlook appear roughly balanced". "I think it's more just, we are just looking at the economy and what does it need and how do we sustain the expansion, keep the labour market strong and try to keep inflation near 2 percent". Economic activity is projected to expand 2.4% in 2019, unchanged from the previous forecast; finally, the economy is expected to grow 2.0% in 2020, unchanged from the previous forecast.
Economists said the Fed left little doubt that it's prepared to increase the pace of its credit tightening to guard against high inflation later on.
Estimates of longer-run interest rates were unchanged and seen reaching as high as 3.4 per cent in 2020 before dropping to 2.9 per cent in the longer run.