The Federal Reserve Open Market Committee (FOMC) voted to raise the target range for the federal funds rate by 25 basis points to 0.75 to 1 percent. The vote was near unanimous, with Minneapolis Fed President Neel Kashkari casting the only dissenting vote, wanting to hold rates steady.
The projected policy path for the federal funds rate was in line with December’s, with the Fed’s dot plot showing three rate hikes this year. Participants estimated a target rate of 1.4 percent for 2017, a 2.1 percent rate for 2018, and a 3.0 percent rate for 2019.
In their decision to move the target rate, the Committee noted that the labor market has “continued to strengthen and that economic activity has continued to expand at a moderate pace.” Monetary policy remains accommodative, supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.
The Committee once again announced that it is maintaining its policy of reinvesting principal payments from its holdings of agency debt and mortgage-backed securities, and of rolling over maturing Treasury securities at auction, anticipating it will do so until normalization of the federal funds rate is under way.
Read the FOMC statement.