The Fed raises interest rates again saying 'economy is doing well'
WASHINGTON-- Don’t look now, but nearly eight years after the Great Recession ended, it’s finally starting to feel like a normal economy again, at least judging by the Federal Reserve’s second interest rate hike in three months
The Fed on Wednesday March, 15th raised its benchmark short-term rate by a quarter percentage point to a range of 0.75% to 1% and stuck to its forecast of two more such increases this year and three in 2018. Some economists had expected Fed policymakers to modestly step up the pace.
Wall Street cheered the Fed’s decision but reacted with restraint. The Dow Jones industrial average rose 113 points, or 0.5%, to 20,950. “The market got everything it wanted,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. The Fed “signaled the economy is doing better but reaffirmed that the pace of (rate hikes) will be gradual.”
The move is expected to filter through the economy, pushing up rates slightly for everything from mortgages and car loans to credit card debt and bank savings accounts.
"The simple message is -- the economy is doing well." Federal Reserve Chair Janet Yellen said at a news conference. "The unemployment rate has moved way down and many more people are feeling more optimistic about their labor prospects."
The Fed’s rate hike Wednesday is likely to have the biggest and most rapid effect on short-term interest rates for auto loans and credit cards, exerting a lesser impact on longer-term loans such a 30-year mortgages.