For the third time this year, members of the Federal Open Market Committee raised federal funds rate by a quarter-point.
At a news conference Wednesday following the committee's two-day meeting, Chairman Jerome Powell cited strong labor market conditions and stable inflation as reasons the committee raised the target range for the federal funds rate to 2% to 2.25%.
Of note, the Fed removed wording from its policy statement declaring its stance of monetary policy "remains accommodative." James McCann, senior global economist at Aberdeen Standard Investments, said the removal "raised a few eyebrows."
"This could be taken as an indication that the Fed will tread cautiously in this stage of its policy adjustment, or it could simply reflect a desire from Chair Powell to provide less concrete guidance on these topics — especially given that interest rate forecasts were unchanged and growth adjusted slightly higher," Mr. McCann said.
As his news conference Wednesday, Mr. Powell said the change in wording doesn't signal any change in the expected course of interest rates. "Instead, it is a sign that policy is proceeding in line with our expectations," he said.
FOMC members project, on average, the federal funds rate to rise to 2.4% by the end of 2018, 3.1% by the end of 2019 and to 3.4% by the end of 2020. One more rate hike is expected in December and three more are likely next year.
"Today's dropping of keyword 'accommodative' from its policy statement ensures the Fed remains on course for further hikes as unemployment heads toward multidecade lows," said Robert Sierra, director of sovereigns for Fitch Ratings Inc., in a statement. "The Fed continues to be very much focused on strong domestic conditions and neither trade concerns nor recent emerging market turbulence affected today's decision."
Mr. Powell touted the country's strong economy, low unemployment and rising wages multiple times at his news conference, but he did express concern when asked about the ongoing trade war.
"If this, perhaps inadvertently, goes to a place where we have widespread tariffs that remain in place for a long time, a more protectionist world, that's going to be bad for the United States economy and for American workers and families, and also for other economies," he said.
The FOMC raised its forecast for U.S. GDP in 2018 to 3.1% from 2.8% but expects it to slow to 2.5% next year, 2% in 2020 and 1.8% in 2021.