As expected, the Fed raised its benchmark interest rate by 25 basis points.

14/06/2018 05:37 WIB

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This is the second interest rate hike by the Fed this year and the seventh since December 2015.

Inflation and Interest Rate Movements of the Fed (Mar 2012-Jun 2018)

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As expected, the Fed raised its benchmark interest rate by 25 basis points.

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Inflation and Interest Rate Movements of the Fed (Mar 2012-Jun 2018)

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The Federal Open Market Committee (FOMC), the central bank of the United States (The Fed), at its June 12-13, 2018 meeting, decided to raise its benchmark interest rate by 25 basis points (bps) to 2%. This is the second rate hike this year and the seventh since December 2015.

The Fed's decision to raise interest rates signals a somewhat aggressive stance this year and demonstrates confidence in economic growth. However, the Fed also acknowledged the recent rise in inflation. Based on the Fed's dot plot released on Wednesday local time, there is a high probability of four interest rate hikes in the full year. This means there is still potential for two more increases by the end of the year.

US inflation has shown an upward trend since mid-2015, peaking in May 2018 at 2.8% (YoY). This is the highest inflation rate since March 2012. Economic growth and the individual and corporate tax cuts implemented by US President Donald Trump have led to increased consumer spending, resulting in higher prices. To curb inflation, the US central bank raised its interest rates.

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."