FED hikes rates by 25 basis points to 1.50%-1.75%

The Federal Reserve has raised interest rates for the sixth time since the Financial Crisis and signaled that at least two additional rate hikes are coming in 2018.

The central bank announced an increase in its benchmark interest rate target range by 0.25% to a new band of 1.5%-1.75%. This move puts the effective fed funds rate at around 1.63%, the highest since September 2008. All eight voting members of the FOMC voted in favor of Wednesday’s decision.

The Fed today acknowledged an upgraded outlook for the economy by including an entirely new sentence in its statement which said, “The economic outlook has strenghtened in recent months.”

The statement noted, however, that, “Recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings.” In January, the Fed has described gains in the labor market, household spending, and business investment as “solid.” The Fed also changed its characterization of job gains from its January policy statement to “strong” from “solid.”

In February, the unemployment rate stood at a 17-year low of 4.1% for the fifth-straight month. In the first quarter, GDP growth hit an annualized rate of 2.5% while manufacturing, small business, and consumer sentiment surveys all continue to hold near post-crisis highs. Some on Wall Street have said these dynamics indicate this is “as good as it gets” for the U.S. economy.

Read full statement »» Decisions Regarding Monetary Policy Implementation

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