As expected, the Federal Reserve announced today that it would raise interest rates by a quarter of a percent.
“In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent,” the Federal Open Market Committee said in a statement. “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.”
The hike marks only the third time in a decade the Fed has raised its benchmark interest rate. The last hike came in December.
But the hike was widely expected by analysts. Financial markets last week were giving the odds of a March rate hike as 80%, and comments from various Fed officials over the last few weeks have shifted market watchers from expecting two hikes in 2017 to expecting three or more.
The hike came as no surprise because the economic news has continued to be relatively good, Bankrate’s Greg McBride recently said in an interview with KTSA News.
“We continue to see job growth,” McBride said. “…Even income growth has picked up a little bit. All of the signs are there for the Fed to push interest rates a little bit higher.”
The FOMC said in its statement that in determining any further rate hikes this year, it would assess economic conditions “relative to its objectives of maximum employment and 2 percent inflation.”