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The Federal Reserve increased a key interest rate again Wednesday, which will trigger higher rates on credit cards, home equity lines and other kinds of borrowing.

The biggest change the Fed made Wednesday was to signal that it intends to do two more rate hikes this year, instead of just one. Officials penciled in a total of four rate increases for this year, up from a projection of three increases at their March meeting.

Interest rate hikes will hit consumers in their wallets. Should inflation eventually pick up, the Fed might move to tighten credit more aggressively.

The federal funds target rate, which is now between 1.75 and 2 percent, is the highest it's been in almost a decade, indicating that the nation's central bank has confidence the economy will continue to expand.

Greg McBride, chief financial analyst for the interest rate website Bankrate.com, said that could "squeeze" families if wage growth remains sluggish. "The Fed is prepared to be quicker about pushing rates higher".

The Fed move came after a two-day meeting where its members discussed the robust state of the USA economy and the potential impact of a trade war amid rising tension between the U.S. and its largest trading partners. The statement the Fed issued Wednesday after its latest policy meeting ended suggested that he does.

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At a news conference, Powell sought to portray the Fed's actions as evidence mainly that the economy is doing well and not that the central bank is eager to accelerate its rate increases.

Mr Powell said concerns about trade are rising and the bank has received anecdotal reports that the uncertainties are leading companies to hold off on investment and hiring.

Estimates of longer-run interest rates were unchanged and seen reaching as high as 3.4 percent in 2020 before dropping to 2.9 percent in the longer run. After years in which the economy expanded at roughly a tepid 2 percent annually, growth could top 3 percent this year. Unemployment, now at an 18-year low of 3.8 per cent, would drop to 3.6 per cent by year's end and to 3.5 per cent in 2019 and 2020 - levels not seen in 49 years.

The unemployment rate is seen falling to 3.6 percent in 2018, compared to the 3.8 percent forecast in March.

The Fed said its policy of further gradual rate increases will be "consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee's symmetric 2 percent objective".

The Fed's pace of rate hikes for the rest of the year could end up reflecting a tug of war between a sturdy economy and the risks to growth, including from a potential trade war that could break out between the United States and such key trading partners as China, the European Union, Canada and Mexico. When the Fed tightens credit, it aims to do so without derailing the economy.


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