Fed Hikes Interest Rates

The Federal Reserve on Wednesday decided to raise its benchmark interest rate, as expected, and upped its expectation for the number of rate hikes in 2017.

This move, which markets saw a 100% probability of, will increase the target of the federal funds rate — which banks use to lend to each other overnight — by 25 basis points, to a range of 0.50 to 0.75%.

This was the second rate hike in a decade. By continuing to lift rates from near zero, the Fed is slowly ending the era of unprecedented monetary policy support and giving the economy room to advance without it. A higher fed funds rate will lift rates on things like credit cards and mortgages and test the extent to which consumer spending and business investment can propel the economy without Fed stimulus.

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