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- May 1, 2018: Vol. 30, Number 5

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Fed increases rates by a quarter point

by Loretta Clodfelter

The Federal Open Market Committee increased the target federal funds rate by 25 basis points, according to a statement released March 21. The new target range is 1.50 percent to 1.75 percent.

A strengthening labor market and improving economy were drivers behind the Fed’s decision. A statement from the FOMC noted, “Job gains have been strong in recent months, and the unemployment rate has stayed low.” At the same time, inflation remains below 2 percent, so the Fed is maintaining an “accommodative” stance on monetary policy, “supporting strong labor market conditions and a sustained return to 2 percent inflation.”

The move was the first under new Federal Reserve Chair Jerome Powell. In a press conference following the statement’s release, Powell noted, “There’s no sense in the data that we’re on the cusp of an acceleration in inflation. We’re very alert to it, but it’s not something we observe at the present.”

The Fed previously increa

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