Fed pulls trigger on rate hike; ‘gradual’ is key word
BUSINESS RECORD STAFF Dec 16, 2015 | 9:20 pm
1 min read time
305 wordsAll Latest News, Banking and Finance, InsuranceThe Federal Reserve today raised interest rates for the first time in almost a decade in a widely telegraphed move while signaling that the pace of subsequent increases will be “gradual” and in line with previous projections,Bloomberg reported.
The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent.
Policymakers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.
“The committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective,” the Open Market Committee said in a statement Wednesday following a two-day meeting in Washington, D.C. The Fed said it raised rates “given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes.”
The increase draws to a close an unprecedented period of record-low rates that were part of extraordinary and controversial Fed policies designed to stimulate the U.S. economy in the wake of the most devastating financial crisis since the Great Depression.
Markets reacted favorably to the news. As of 3:07 p.m. the Dow Jones industrial average was up 224 points to 17,479, or 1.3 percent, and the NASDAQ was up nearly 1.5 percent to 5,071. The Iowa Index, a 22-stock index of Iowa-based companies, was up by 1.3 percent in today’s trading.
Most consumers won’t feel any immediate impact in 2016 from the gradual rate hike, but there are some tips available from this article in The New York Times about adjustments you may want to make to your finances.
Trending News
