The Federal Open Market Committee (FOMC) announced today that it was raising short-term rates by a quarter point — the first increase in nine years.
The unanimous decision had been widely expected by investors after Federal Reserve officials, including Chairwoman Janet Yellen, had hinted that the central bank was ready to change direction after keeping interest rates between zero and one-quarter percent since December 2008 to encourage spending and bolster the economy.
The FOMC said in a statement that “there as been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”
The Fed’s decision will mean more money for savers but also higher borrowing rates for students, new homeowners and new car buyers. The last time the Fed raised rates was in June 2006.
(Source: ABC News)