Fed is expected to raise interest rates again, Fed Chair Janet Yellen said in comments to lawmakers

LONDON – The US Federal Reserve will raise interest rate again on Wednesday as the US economy picks up steam after a tough first quarter.

The central bank said the economy grew at a “substantially faster pace” than expected during the second quarter, despite the collapse in oil prices.

The Fed is likely to raise rates in the first quarter as well as in the second, as inflation rises. 

The US economy grew 1.9% in the third quarter, compared with an annualised 2.3% growth rate.

The Fed has also been easing its stance on rates, cutting its benchmark overnight rate to a record low of 1.25% in September.

Fed Chair Janet L. Yellen has previously said the central bank will keep rates near zero until unemployment falls below 6%.

The Federal Reserve said on Thursday that its policy rate was unchanged at 1.75%.

The central banks rate decisions are expected to be the last one before the June 17-19 meeting.

The US Federal Open Market Committee voted to keep its benchmark rate at zero overnight after three months of tightening.