Fed Reserve Raises Key Interest Rate After 7 Years of Record Low - NBC Right Now/KNDO/KNDU Tri-Cities, Yakima, WA |

Fed Reserve Raises Key Interest Rate After 7 Years of Record Lows

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Fed Reserve raises key interest rate after 7 years of record lows Fed Reserve raises key interest rate after 7 years of record lows

WASHINGTON (AP) - The Federal Reserve is raising interest rates after seven years of record lows. But it's signaling that further rate hikes will likely be made slowly as the economy strengthens further and muted inflation rises.
    
The Fed's move to lift its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent ends an extraordinary seven-year period of near-zero rates that began at the depths of the 2008 financial crisis. Consumers and businesses could now face modestly higher rates on some loans.
    
The Fed's action reflects its belief that the economy has finally regained enough strength 6½ years after the Great Recession ended to withstand higher borrowing rates. But the statement announcing the rate hike said the committee expects "only gradual increases" in rates going forward.

US Federal Reserve policymakers foresee slower rate rises:

WASHINGTON (AP) - Federal Reserve policymakers have slightly lowered their projections for short-term interest rates over the next three years, a sign that policymakers may move slowly after their first rate increase in seven years.
    
More Fed policymakers expect the short-term rate will be 1.38 percent or below at the end of 2016 than in previous projections in September. And they forecast the rate will be 2.38 percent at the end of 2017 and 3.25 percent at the end of 2018, both a quarter-point lower than in September.
    
Still, the Fed's forecasts for the U.S. economy and interest rates have proven too optimistic for most of the recovery from the Great Recession. A year ago, for example, policymakers projected the Fed's short-term rate would be much higher by the end of next year.

(Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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