Research - MARCH 15, 2017

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Fed raises rates by a quarter point

by Loretta Clodfelter

In a widely anticipated move, the Federal Open Market Committee raised the target federal funds rate by 0.25 percent to a range of 0.75–1.00 percent at its meeting March 14–15.

In a statement, the FOMC notes, “Near-term risks to the economic outlook appear roughly balanced. The committee continues to closely monitor inflation indicators and global economic and financial developments.”

The U.S. economy is entering into a period of moderate strength, with close to full employment, a robust equity market and rising commodity prices. Against that backdrop, the Fed is likely to push a return to the long-run equilibrium level for nominal interest rates, reports Moody’s Investors Service.

The increase does not come as much of a surprise to the market. In recent weeks, Janet Yellen, chair of the Federal Reserve, has signaled the intention to increase rates at the meeting.

Rates are likely to continue going up in 2017. The FOMC’s statement notes, “Th

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