After nine years and plenty of wondering, the Federal Reserve announced Wednesday that it will finally raise interest rates from near zero to 0.25 percent. The central bank also indicated strongly that it would continue to gradually increase rates in the near-future, and adjust what they said remain an “accommodative” strategy as they go along.
“The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective,” the Fed said in its announcement. “Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 0.25 percent to 0.50 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”
Fed Chair Janet Yellen received unanimous approval from committee members for the plan.
“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the statement read. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
