The Federal Reserve increased interest rates by 0.25 percentage points, bringing the target range for the federal funds rate to 2.25% to 2.5%. This marks the fourth rate hike of 2018, as the central bank continues to gradually tighten monetary policy.

However, the Fed’s statement accompanying the decision suggested a more cautious approach to future rate increases. The statement noted that the committee will be “patient” as it determines what future adjustments to the federal funds rate may be appropriate.

Several factors likely contributed to the Fed’s more dovish tone. Global economic growth has slowed in recent months, and financial markets have experienced increased volatility. Additionally, inflation remains near the Fed’s 2% target.

Economic projections released by the Fed indicate that policymakers expect the economy to grow at a slower pace in 2019 than previously anticipated. The median forecast for GDP growth in 2019 was revised down to 2.3%, from 2.5% in September.

The Fed’s decision was not unanimous. Two members of the Federal Open Market Committee (FOMC), the Fed’s policy-setting body, dissented from the decision to raise rates. They argued that the Fed should wait to see more evidence that inflation is rising before raising rates further.

Looking ahead, the Fed will continue to monitor economic data closely as it considers future policy adjustments. The pace of future rate increases will depend on the evolution of the economic outlook, including developments in global growth and financial markets.

Key Takeaways:

• The Federal Reserve raised interest rates by 0.25 percentage points.
• The Fed signaled a potentially slower pace of rate increases in 2019.
• Economic projections suggest slower growth in 2019.
• Two FOMC members dissented from the decision to raise rates.