Fed declares mortgage rate hike - the first of many

This article by Holden Lewis was first seen on bankrate.com on Wednesday, December 14, 2016

Fed raises interest rates, including yours

 

The Federal Reserve has made its much anticipated and expected move, increasing a key short-term interest rate by a quarter of a percentage point on Wednesday. The hike was the first for the Federal Reserve since last December, and many economists believe it won't take that long for another increase. The central bank's monetary policy arm raised the federal funds rate to a target range between 0.5 percent and 0.75 percent. The increase means that the prime rate also will rise, from 3.5 percent to 3.75 percent. Variable-rate credit cards and home equity lines of credit will rise a quarter of a percentage point because they are tied to the prime rate. Only the 1st of several increases? "Our decision to raise rates should certainly be understood as a reflection of the confidence that we have in the progress that the economy has made and our judgment that that progress will continue," Federal Reserve Board Chair Janet Yellen said during a news conference following the central bank's announcement. "It is a vote of confidence in the economy." In the six weeks since the last Fed meeting, the unemployment rate has gone down and wages appear to have gone up. "The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further," Fed policymakers said in a statement. Projections accompanying the Fed's announcement suggest that members of the policy panel expect three more increases in the federal funds rate during 2017. But note that last December's first rate hike since 2006 came with a projections that there would be four more this year. Read more: http://www.bankrate.com/financing/federal-reserve/fed-raises-interest-rates-including-yours/#ixzz4SxFIOdlL Follow us: @Bankrate on Twitter | Bankrate on Facebook

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