Fed raises key rate and sees possible acceleration in hikes
WASHINGTON — The Federal Reserve took note of a resilient U.S. economy Wednesday by raising its benchmark interest rate for the second time this year and signalling that it may step up its pace of rate increases.
The Fed now foresees four rate hikes this year, up from the three it had previously forecast. The action means consumers and businesses will face higher loan rates over time.
The central bank raised its key short-term rate by a modest quarter-point to a still-low range of 1.75 per cent to 2 per cent. With the economy now nine years into an expansion, the move reflects the steadiness of growth, the job market’s strength and inflation that’s finally reaching the Fed’s 2 per cent target level.
Economists said the Fed left little doubt that it’s prepared to increase the pace of its credit tightening to guard against high inflation later on.