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U.S. Fed Raises Interest Rates by 0.25%
As expected, the Federal Reserve has raised its benchmark interest rate by another quarter-point.
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As expected, the Federal Reserve has raised its benchmark interest rate by another quarter-point.
The increase, the third by the central bank this year, elevates its short-term lending rate to a range of 1.25%-1.50%. Many economists expect the Fed will slowly elevate the rate above 2% next year, a reflection of confidence in the strength of the U.S. economy.
The bank dropped its overnight lending rate to near zero when the financial crisis began in 2008 in an effort to spur economic activity in the U.S. The rate didn’t begin to rise until the end of 2015.
The American economic has been gently improving since then. New jobs have been added at an average 196,000 per month over the past two years. Unemployment, which reached 10% in 2010, has dropped to 4.1%—its lowest level in 16 years.
Economists say the only worrisome statistic remaining is the inflation rate. It has been mired for six years below the 2% level considered healthy by the central bank. But inflation has been rising slowly for two years, easing concerns about a possible destructive deflationary spiral.
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