Fed's minutes reflect confidence in economy and path of policy tightening

The Federal Reserve released the minutes of its September 25-26 meeting, at which the Federal Open Market Committee voted to increase interest rates by 25 basis points for the third time this year to just below 2.25% as expected, while carrying on plans to normalize the balance sheet. 

FOMC members pointed to the data available to the Committee since the last meeting, as the labor market kept improving while economic activity expanded, and the unemployment fell. 

Members said household spending gained steam, as fixed-rate investment grew solidly, while inflation gauges in the last 12 month rose to nearly 2%. 

Members asserted the Committee's commitment to boost job opportunities and stabilize prices, as members still project gradual tightening of the monetary policy to allow the economy to expand moderately.  

As of 07:03 GMT, the dollar index, tracking the greenback against a basket of currencies, rose 0.51% to 95.54, with an intraday low at 95.05, and the highest since October 10 at 95.56. 

Similarly, members said that taking into consideration the labor conditions and current inflation rates, the Committee decided to raise interest rates to below 2.25% as the economy continues to strengthen and inflation extends its lead. 

The Committee said it's assessing the current and projected economic conditions, with an eye towards achieving its targets of full employment and 2% inflation, while taking into consideration a wide group of data and economic information, including the labor market conditions and inflation indices. 

Three-Year Forecasts 

The following details the Federal Reserve's three year forecasts for growth, unemployment, inflation, and interest rates, released after the June policy meeting. 

Growth rates are expected to range from 3% and 3.2% in 2018, compared to 2.7% to 3% in previous forecasts, while in 2019, the bank forecasts a growth of 2.4% to 2.7%, while expecting growth of 1.8% to 2.1% in 2020, compared to 1.8% and 2.0% before, and finally, long-term growth is forecast to range from 1.6% to 2%.

Unemployment rates for 2018 are expected to hover at 3.7%, compared to 3.6% to 3.7% in previous forecasts, while rates for 2019 are forecast to range from 3.4% to 3.6%. For 2020, forecasts point to 3.4% to 3.8%, while ranging from 4.3% to 4.6% in the long term.

Inflation in 2018 is expected to range from 2% to 2.1%, same as before, while ranging from 2% to 2.1% in 2019. In 2020, inflation is projected to range between 2.1% and 2.2%, unchanged from before, while settling at 2.0% in the long term, also the same as before.

Core inflation in 2018 is forecast to range between 1.9% and 2%, same as before, while ranging from 2% to 2.2% in 2019, and between 2.1% to 2.2% in 2020, same as before.  

Finally, the FOMC saw overnight interest rates at 2.1% to 2.4% this year, same as previous estimates, while projecting a range from 2.9% to 3.4% in 2019, as rates are expected to range between 3.1% and 3.6% in 2020, while in the long term, rates are projected to range between 2.9% and 3.6%, same as before. 

US President Donald Trump accused the Federal Reserve of causing a sharp correction in markets with its interest rate policy, considering it too strict and a "mistake". 

In a recent Pennsylvania rally, Trump said the Federal Reserve has gone "loco" with its latest rate hikes, while noting that stocks are undergoing a normal correction after a succession of record highs.