19 Sep

Fed raises key interest rate and foresees 3 hikes in 2017

first_imgWASHINGTON — The Federal Reserve has raised a key interest rate in response to a solid U.S. economy and expectations of higher inflation, and it foresees three rate hikes in 2017.The Fed’s action Wednesday will mean modestly higher rates on some loans.The central bank announced after its latest policy meeting that it’s increasing its benchmark rate by a modest quarter-point to a still-low range of 0.5 percent to 0.75 percent. The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.The Fed’s move, only the second rate hike in the past decade, came on a unanimous 10-0 vote. It also released an updated economic forecast that showed modest changes to its outlook for economic growth, unemployment and inflation, mainly to take account of stronger growth and a drop in the unemployment rate for November to a nine-year low of 4.6 percent. Its new projection has the unemployment rate dipping to 4.5 percent by the end of 2017 and remaining at that level in 2018.The Fed foresees economic growth reaching 1.9 percent this year, slightly above its forecast in September, and 2.1 percent in 2017. That’s slightly more optimistic than it projected in September.The Fed kept its long-term estimate for economic growth at 1.8 percent, far below the 4 percent pace that President-elect Donald Trump has said he can achieve with his program of deregulation, tax cuts and increased spending on infrastructure.last_img

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