By Ovunc Kutlu
The Federal Reserve increased its benchmark interest rate as expected, the Federal Market Open Committee (FOMC) announced Wednesday.
In its first meeting under the new Fed Chair Jerome Powell, committee members voted unanimously to raise the federal funds rate by 25 basis points to a target range of 1.5 percent to 1.75 percent.
The increase marked the first hike for the year and the sixth since December 2015. The central bank made three rate hikes last year under the previous head Janet Yellen.
"The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation." the FOMC said in a statement.
It said the economic outlook has strengthened in recent months, allowing the committee to increase growth projections for U.S. economy.
The Fed now expects expansion of 2.7 percent in 2018 and 2.4 percent next year, instead of the previous estimates of 2.5 percent and 2.1 percent, respectively.
Unemployment rate projections were also lowered to 3.8 percent for 2018 and 3.6 percent for 2019. Previous estimates were for 3.9 percent for both years.
But Powell, who was handpicked by President Donald Trump to succeed Yellen, conceded it is hard to get economic growth to 3 percent -- a promise Trump made during his campaign.
And he hinted Trump's economic policies were a topic for the committee during its two-day meeting this month.
"A number of participants on the FOMC did bring up the issue of tariffs," Powell said.
"Trade policy has become a concern," according to some business leaders in the U.S. who voiced concern to Fed, he noted.
Trump imposed tariffs of 25 percent on steel and 10 percent on aluminum imports earlier this month, while NAFTA, which Trump called "unfair" is still being renegotiated with the U.S., Canada and Mexico.
The FOMC is expected to make two more rate hikes this year and revised up its forecast of the number of increased in 2019 from two to three as inflation picks up.