Fed raises interest rates and signals faster hikes on the way
WASHINGTON — Interest rates are going up again.
The Federal Reserve on Wednesday lifted its benchmark rate by a quarter of a percentage point, the second hike this year.
And a majority of policy makers now expect a total of four interest rate increases this year. Fed officials had been split about whether to raise rates three times this year or four.
Policy makers said in a one-page statement that the labor market “has continued to strengthen” and than economic activity “has been rising at a solid rate.”
The federal funds rate, which helps determine rates for mortgages, credit cards and other borrowing, now stands at a range of 1.75% to 2%.
Investors were expecting Wednesday’s quarter-point increase. The Fed is raising rates gradually to keep the economy in check as inflation creeps higher and the job market grows even tighter.
The unemployment rate is 3.8%, the lowest since 2000 and tied for the lowest reading since 1969.
The Fed offered an improved forecast for unemployment this year, lowering its forecast to 3.6%. It also forecast an even lower unemployment rate of 3.5% for 2019 and 2020.