There is an improving economy and labor market, the Federal Reserve raised its key interest rate on Wednesday for the first time in 2016 by a quarter percentage point, and projected slightly faster increases the next few years amid the prospect of a massive government stimulus.
In a statement after a 2 day meeting the Fed said policymakers unanimously agreed to lift the benchmark federal funds rate – the rate banks charge each other for overnight loans — from 0.4% to 0.6%.
Wednesday’s hike was just the 2nd since 2006 despite an unemployment rate that has tumbled from 10% in 2009 to a near-normal 4.6%. The Fed has nursed along a sluggishly growing economy with near-zero rates since the recession ended seven years ago. Its latest move is expected to ripple through the economy, nudging up rates slightly for everything from mortgages and auto loans to corporate bonds and bank savings rates.