Fed on course to raise rates by the end of 2015

Lauren Fedor
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THE FEDERAL Reserve has signalled that a rise in short-term interest rates could come as soon as September, as the US economy continues to show signs of improvement.

In a statement after a two-day meeting last night, Fed policymakers did not explicitly say when they plan to lift the central bank's benchmark rate, but with their interest rate projections unchanged, it appeared as though the US central bank was on course to raise rates for the first time since 2006 later this year.

In a press conference, Fed chair Janet Yellen stressed that rate moves would be gradual when they began. She also said that the central bank wanted to see more “decisive” evidence of economic strength in the US before triggering a rate rise.

According to Fed analysis, after contracting in the first quarter, the US economy is now on track to grow between 1.8 per cent and two per cent this year, down from the 2.3-2.7 percent range forecast in March. The Fed also said that US labour markets continued to improve, though unemployment is projected to be slightly higher at the end of the year than previously projected.

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