Fed Hikes Rate Fourth Time This Year: 6 Solid Insurance Picks

As widely expected, the Federal Reserve has increased interest rate again this year. This marks the fourth rate hike in 2018. With the latest raise of one-quarter percentage points at the last held FOMC meeting, the interest rate now stands at 2.5%. However, Fed officials now project two raises in 2019, down from the earlier expectation of three hikes.

Major indexes, namely S&P 500, Nasdaq and Dow Jones Industrial Average declined in yesterday’s trading session.

Fed Chairman Jerome Powell stated “we have seen developments that may signal some softening... In early 2018, we saw a rising trajectory for growth. Today, we see growth moderating ahead."

Fed officials now expect two hikes in 2019 to take the interest rate to 2.9%, down from 3.1% as projected in its September FOMC meeting. Also, interest rate for each year has been revised down.  For both 2020 and 2021, the rate is now projected to be 3.1%, down from 3.4% expected earlier. The same should be 2.8% over the long haul, down from 3% predicted at the meeting held in September.

The Fed also provided an updated view on unemployment.  Fed officials still expect the unemployment rate at 3.7% for 2018 and 3.5% for 2019. However, for 2020, unemployment is expected to increase a bit to 3.8% (up from 3.5% projected at the September FOMC meeting) and 3.8% in 2021 (up from 3.7%). Over the longer term, the unemployment rate is estimated to be 4.5%.

A spurt in employment shows average increase of 0.17 million in jobs over the past three months. Per U.S. Bureau of Labor Statistics, unemployment rate was 3.7% in November for the third month in a row.

The Fed now estimates GDP to rise 3% in 2018 and 2.3% for 2019. However, these are down from 3.1% and 2.5%, respectively projected in the September meeting. Expectations for 2020 and 2021 remain consistent with September projections of 2% and 1.8%, respectively. Over the longer term, GDP is expected to improve 2.9%, up from 2.8% expected earlier.

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