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Fed Raises Interest Rates Another 0.25%
The Federal Reserve is raising its benchmark lending rate by one-quarter percentage point today to a range of 1.0%-1.25%, its highest level since 2008.
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The Federal Reserve is raising its benchmark lending rate by one-quarter percentage point today to a range of 1.0%-1.25%, its highest level since 2008.
The increase, which was announced late Wednesday, was expected and caused little effect on financial markets. The central bank says it plans to make another increase before year-end, assuming the U.S. economy continue to perform as expected.
The Fed also says it will begin reducing its holdings, starting with $10 billion in maturing Treasury securities and mortgage bonds that won’t be reinvested. The so-called roll offs would gradually rise to $50 billion per month.
Fed Chair Janet Yellen says the plan is deliberately structured to “avoid creating market strains.” The central bank now predicts inflation, excluding volatile food and energy prices, will rise to 1.7% this year and reach the desired target of 2% by the end of 2018.
The bank’s revised unemployment forecast now predicts a rate of 4.3% by the end of this year and 4.2% through 2018 and 2019.
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