June 15, 2017
Signaling a continued vote of confidence in the U.S. economy, the Federal Reserve raised the key interest rate for the third time in six months. The short-term rate was increased by a quarter-point to a still-low range of 1% to 1.25%.
The increase may push up borrowing costs, though savers could see improved returns. One additional rate increase is expected this year.
The money policy group also plans to start gradually pairing bond holdings later this year, a move that could cause long-term interest rates to rise. The Fed eventually wants to allow a small amount of bonds to mature without being replaced, and would accelerate that as markets adjust to the process.
The economy, though sluggish in its ninth year of recovery, continues to grow and the Fed sees no risk of a recession on the horizon. The job market remains solid, with unemployment at a 16-year low of 4.3%.
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