The median projection for the year-end federal funds rate target over the next three years rises at about a percentage point per year. The Committee has not formally adopted a definition of gradual, but one can glean some information from the projections that meeting participants submitted in December and published in a document called the Summary of Economic Projections. That statement naturally raises the question of what “gradual” means. 16, the FOMC stated that “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate….” That said, the FOMC has provided some helpful thoughts based on our understanding of how economic conditions are likely to evolve and how we are going to need to respond.
As always, the future is uncertain, and neither I nor anyone else can give you a definitive answer. Now that the first interest rate increase is out of the way, attention naturally turns to the question of how fast interest rates will rise in the coming year. Raising interest rates marks a significant milestone in this expansion, because it reflects the fundamental strength of the U.S. That coverage was well deserved, since it was our first rate increase since we lowered short-term interest rates to virtually zero seven years earlier, in December 2008. 16, we announced our decision to raise rates. Naturally, there was a good deal of press coverage when finally, on Dec. For most of the year, the focus was on when the Federal Open Market Committee (FOMC) would increase its target interest rate. It’s fair to say that the Federal Reserve received a substantial amount of media attention last year.
Before I begin, I should note that I am speaking for myself, and my remarks should not be attributed to anyone else in the Federal Reserve System. It is a pleasure to discuss the economic outlook with you here today.