Fed keeps key rate steady but notes rising inflation

May 02, 2018 - 2:01 pm

WASHINGTON (AP) — The Federal Reserve is keeping its benchmark interest rate unchanged but says that inflation is climbing after years of being stuck below the Fed's target level.

The Fed left its key short-term rate at 1.5 percent to 1.75 percent, the level it set in March after its sixth increase since December 2015. The Fed is gradually tightening credit to control inflation against the backdrop of a tight labor market and a pickup in consumer prices.

The Fed says it expects "further gradual increases" in rates and says it's moving close to achieving its 2 percent target for annual inflation.

The next rate increase is expected in June. Some analysts think the Fed may signal then that it foresees four hikes for 2018, up from the three it predicted in March.

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