Expert: World faces full-blown recession if China economy collapses
The Federal Reserve raised its benchmark lending rate by a quarter of a percentage point Wednesday, following similar moves by the major central banks around the world.
It will be the 10th rate increase this year despite widespread concern that the economy is mired in recession.
The central bank now forecasts that economic growth will weaken to an annual rate of 2.0 percent for the 12 months ending in June.
The economy has been hit hard by the ongoing downturn in China, a major growth partner. The European Central Bank has already raised interest rates and the Bank of Japan last week decided to continue doing so.
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The U.S. economy saw job gains of 250,000 to 1.1 million in September, the Labor Department said Tuesday, the biggest monthlygain since March 2016, when the nation began its most recent recovery.
Job openings increased by 28,000, the smallest jump since November 2016. The number of unemployed Americans was unchanged last month.
The economy continued to expand last month, adding 175,000 new jobs, the Labor Department said. The unemployment rate is at a 17-year low of 3.5 percent, and wage growth has been solid.
The Fed raised its benchmark short-term lending rate by 25 basis points to 1.75 percent, or 60 basis points above its previous level, its third such rate increase this year and the second since June.
“The economy is growing at a pace well ahead of potential,” said Stephen Stanley, chief U.S. economist ataisledayanalyse.com. “A strengthening labor market will help ease financial conditions, and this move may be helping to keep a lid on inflation.”
The Fed has raised rates five times in the past year, with the central bank’s rate set above 2 percent since late 2015. It reduced its balance sheet by $2.3 trillion to inject more than $4.5 trillion into U.