Federal Reserve, buoyed by stronger economy, lifts rates again

The Federal Reserve on Wednesday raised interest rates one notch higher as the U.S. economy continues to get healthie...

Posted: Dec 14, 2017 1:28 AM
Updated: Dec 14, 2017 1:28 AM

The Federal Reserve on Wednesday raised interest rates one notch higher as the U.S. economy continues to get healthier.

The rate hike, which was widely expected, was the third this year.

Policy makers pointed to the lower number of unemployed workers, increased spending by households, and bigger investments by businesses in recent quarters.

"The labor market has continued to strengthen and ... economic activity has been rising at a solid rate," the Federal Open Market Committee said in a statement following its two-day meeting.

The federal funds rate, which helps determine rates for mortgages, credit cards and other borrowing, will now hover in a range of 1.25% to 1.5%. Overall, rates are still historically low.

Related: Tax cuts could make it harder to fight the next recession

Two Fed officials dissented on the decision: Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari, who felt policy makers should wait longer before raising rates again.

This is the fifth time the Fed has lifted interest rates since the 2008 financial crisis. Policy makers plan to raise rates three more times in 2018, and then twice in 2019.

Central bankers, under the leadership of outgoing Fed chair Janet Yellen, have moved patiently to maintain economic growth at a steady pace. They have kept a watchful eye on inflation, which has run below expectations.

President Trump nominated Fed governor Jerome Powell in November to take over when Yellen ends her four-year term on February 3. It's largely expected that Powell will stick to a playbook similar to that of his predecessor, who was named to the post by former President Obama. Yellen was the first woman to serve in the role.

Related: America's wealth gap is bigger than ever

Top Fed officials have been mystified about why inflation, which reflects the prices of everything from meat and cheese to houses and cars, has fallen short of the Fed's goal of 2%. That's what the Fed considers healthy for the economy.

In deciding to slowly raise rates over the past year or so, the Fed has weighed competing forces. Stubbornly low inflation and consumer prices suggested the Fed should hold off on raising rates. But steady economic growth and low unemployment suggested it should act.

Yellen has described inflation as something of a "mystery" but has signaled she expects it will stabilize over time.

Related: Tax overhaul could mean major changes to your paycheck

It's the job of central bankers to shift policy levers, nudging interest rates higher and lower, to boost jobs and keep prices, or inflation, at the optimal level. That means not too high, and not too low.

When inflation is too low, it can hurt the economy. Businesses get queasy about investing in people and equipment. If prices don't rise, wages don't either.

Some Fed officials have warned against raising interest rates until inflation meets its target.

On Wednesday, the Fed said it continues to expect inflation to remain below its target, at 1.7%, and the unemployment rate to be 4.1%, based on its updated economic projections.

Policy makers raised their expectations for economic growth in 2018. The central bank now expects the economy to grow at a slightly faster rate of 2.5%, compared with a previous forecast of 2.4%.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 728811

Reported Deaths: 13405
CountyCasesDeaths
Marion996911740
Lake53548966
Allen40529675
St. Joseph35596550
Hamilton35536408
Elkhart28470441
Tippecanoe22375218
Vanderburgh22293396
Porter18701307
Johnson17923378
Hendricks17199315
Clark12943191
Madison12612339
Vigo12437246
Monroe11873170
LaPorte11856210
Delaware10667186
Howard9895216
Kosciusko9390117
Hancock8260140
Bartholomew8058155
Warrick7777155
Floyd7653178
Wayne7035199
Grant7032174
Boone6687101
Morgan6557139
Dubois6150117
Marshall6016111
Dearborn580077
Cass5794105
Henry5699103
Noble559883
Jackson501172
Shelby490696
Lawrence4522120
Harrison435072
Gibson434792
DeKalb427185
Clinton427053
Montgomery423688
Whitley395239
Huntington390080
Steuben385557
Miami381166
Knox371890
Jasper364747
Putnam359660
Wabash353479
Adams341054
Ripley339170
Jefferson329281
White313554
Daviess296299
Wells291381
Decatur284792
Fayette279562
Greene277885
Posey271333
Scott265653
LaGrange265570
Clay259447
Washington240332
Randolph239781
Spencer232131
Jennings229849
Starke215953
Fountain212046
Sullivan211442
Owen198756
Fulton194840
Jay193630
Carroll188520
Orange182654
Perry182637
Rush173025
Vermillion168843
Franklin167835
Tipton162845
Parke146116
Blackford134632
Pike133734
Pulaski116645
Newton107734
Brown101941
Crawford99514
Benton98514
Martin88615
Warren81815
Switzerland7858
Union71010
Ohio56511
Unassigned0414

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1082815

Reported Deaths: 19428
CountyCasesDeaths
Franklin1258081400
Cuyahoga1119722115
Hamilton799721205
Montgomery514061014
Summit47145945
Lucas42119788
Butler38338584
Stark32273906
Lorain24997481
Warren24274298
Mahoning21546588
Lake20653369
Clermont19761238
Delaware18512133
Licking16418212
Fairfield16176199
Trumbull16032468
Medina15268264
Greene15063244
Clark13983299
Wood13080189
Portage12839203
Allen11639232
Richland11349199
Miami10670217
Muskingum8803133
Wayne8793211
Columbiana8778229
Pickaway8564121
Marion8523135
Tuscarawas8473244
Erie7888154
Hancock6914127
Ross6846155
Ashtabula6805170
Geauga6686148
Scioto6406101
Belmont5881167
Union570848
Lawrence5549102
Jefferson5525151
Huron5430119
Darke5355123
Sandusky5347120
Seneca5282121
Athens519158
Washington5155109
Auglaize490784
Mercer480385
Shelby469293
Knox4486110
Madison435661
Putnam4278100
Fulton422469
Ashland421789
Defiance419697
Crawford3975107
Brown394157
Logan381676
Preble379598
Clinton372163
Ottawa366679
Highland355062
Williams339275
Champaign331658
Guernsey315653
Jackson312551
Perry294950
Morrow284939
Fayette281950
Hardin270864
Henry268666
Coshocton265257
Holmes2603101
Van Wert243463
Adams237852
Pike237634
Gallia235349
Wyandot231055
Hocking215362
Carroll191547
Paulding172640
Meigs144840
Noble133337
Monroe132042
Morgan108423
Harrison108137
Vinton83115
Unassigned02
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Rain moves in overnight into Sunday morning and looks to hang around much of the day, likely forcing Mother's Day plans indoors
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