The Federal Reserve’s governing board announced today that it was raising the benchmark interest rate, fulfilling the expectations of market watchers.
There was broad agreement that a March rate hike was virtually guaranteed. Applications for mortgages have picked up in recent weeks as consumers tried to beat the hike, according to a USA Today report. So it came as no surprise to analysts when the Fed announced that it was raising the federal funds rate a quarter point, from 1.5% to 1.75%.
The Federal Open Markets Committee said in a statement that the move was justified by encouraging economic indicators including strong job gains and low unemployment."
"Inflation on a 12-month basis is expected to move up in coming months and to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely," the FOMC said. "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 1-1/2 to 1-3/4 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation."
There’s broad agreement among market observers that this hike won’t be the last this year, with two or possibly three more rate rises expected in 2018.