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U.S. Fed: Economy Strong Enough to Handle Rate Hike

hamilton-zanze July 02, 2015

The U.S. economy is growing moderately and is likely strong enough to support an interest rate increase by the end of the year, according to U.S. Federal Reserve officials. However, representatives of the central bank emphasized that the rate decision rests on further improvement in the labor market.

From the Federal Reserve press conference:

  • After a weak start to the year, gross domestic product is poised to grow between 1.8% and 2.0% in 2015 — down from a March forecast of between 2.3% and 2.7%.
  • The unemployment rate is expected to be slightly higher than forecasted at the end of the year at 5.2% to 5.3%. The May unemployment rate was 5.5%.
  • Inflation remains low but is expected to gradually rise to its 2.0% target “over the medium term.”
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