The Fed has now raised rates four
times as part of a normalization of monetary policy that began in
December 2015. The central bank had pushed rates to near zero in
response to the financial crisis.
Fed
policymakers also released their latest set of quarterly economic
forecasts, which showed only temporary concern about inflation and
continued confidence about economic growth in the coming years.
They forecast U.S. economic growth of 2.2 percent in 2017, an increase from the previous projection in March. Inflation was expected to be at 1.7 percent by the end of this year, down from the 1.9 percent previously forecast.
A retreat in inflation over the past two months has caused jitters that the shortfall, if sustained, could alter the pace of future rate hikes. But the Fed maintained its forecast for three rate hikes next year.
The Fed's preferred measure of underlying inflation has retreated to 1.5 percent, from 1.8 percent earlier this year, and has run below the central bank's 2 percent target for more than five years.
Earlier on Wednesday, the Labor Department reported consumer prices unexpectedly fell in May, the second drop in three months.
Yellen indicated the Fed still remained confident inflation would rise to its target over the medium
term, bolstered by what she described as a robust labour market that is continuing to strengthen.
The Fed's estimates for the unemployment rate by the end of this year moved down to 4.3 percent, the current level, and to 4.2 percent in 2018, indicating the Fed believes the labour market will continue to tighten.
The median estimate of the long-run neutral rate, which is seen as the level of monetary policy that neither boosts nor slows the economy, was unchanged at 3.0 percent.
They forecast U.S. economic growth of 2.2 percent in 2017, an increase from the previous projection in March. Inflation was expected to be at 1.7 percent by the end of this year, down from the 1.9 percent previously forecast.
A retreat in inflation over the past two months has caused jitters that the shortfall, if sustained, could alter the pace of future rate hikes. But the Fed maintained its forecast for three rate hikes next year.
The Fed's preferred measure of underlying inflation has retreated to 1.5 percent, from 1.8 percent earlier this year, and has run below the central bank's 2 percent target for more than five years.
Earlier on Wednesday, the Labor Department reported consumer prices unexpectedly fell in May, the second drop in three months.
Yellen indicated the Fed still remained confident inflation would rise to its target over the medium
term, bolstered by what she described as a robust labour market that is continuing to strengthen.
The Fed's estimates for the unemployment rate by the end of this year moved down to 4.3 percent, the current level, and to 4.2 percent in 2018, indicating the Fed believes the labour market will continue to tighten.
The median estimate of the long-run neutral rate, which is seen as the level of monetary policy that neither boosts nor slows the economy, was unchanged at 3.0 percent.
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