WASHINGTON, DC–As widely expected by the market, the Federal Reserve raised the federal funds rate to a range of 1.25% to 1.5%. It is the third hike this year but relatively speaking interest rates remain historically low.
Again, as expected, the reasons cited for the increase centered around the solid economy. “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.
More rate increases will be coming; Fed policy-makers have made clear that they plan to raise the interest rates three more times next year and then twice the following year.
About the only surprise the day had to offer came from an entirely different report earlier Wednesday morning: the US Labor Department's core Consumer Price Index, which dropped to 1.7% in November from 1.8% in October. This figure juxtaposed against an increase in inflation expectations Federal Open Market Committee members had set for 2018: it changed to 1.7% from 1.6%.
FOMC also raised its GDP estimate to 2.5% from the 2.1% it set in September and cut its estimate for the unemployment rate by two-tenths to 3.9% for 2018 and 2019.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
