Skip to content
Subscriber Only
Tim Duy

Pressure Builds on the Fed to Raise Rates Faster

The central bank may be lagging behind the pace of the recovery.
Looking backward?

Looking backward?

Photographer: Chip Somodevilla/Getty Images

The unemployment rate continues to slide, hitting 4.4 percent in April. The Federal Reserve’s median forecast for joblessness -- 4.5 percent from the end of 2017 through 2019 -- has once again proved optimistic. But does this mean that Fed officials will hike their interest rate projections at the next Open Market Committee meeting?

Not necessarily. There are a lot of moving pieces in the Fed’s rate forecast, and there is a good chance that at least one of them will offset the impact of a declining unemployment rate. If there is no offset, then the central bank is making a pretty big bet that the economy is close to a tipping point that requires further tightening to keep the odds of overheating at a minimum.