Federal Reserve Raises Interest Rate By 0.25%

After nearly a decade, the Federal Reserve raised the interest rate. The rate is now set at 0.5%–a 0.25% bump—after a unanimous vote by the Federal Open Market Committee.

A period of record-low rates was a controversial measure meant to mitigate the damage the December 2008 financial crisis had on the economy.

The result of the rate increase was almost immediate: the US dollar, which initially fell, climbed 0.3% to 1.0902 per euro. The Open Market Committee is sure that inflation will rise.

In general, the Fed and Bloomberg analysts are optimistic about the US economy, and that the decision indicates the economy is on the path towards sustainable improvement. But, the recovery hasn’t been satisfactory for everyone. Household incomes are still lower, when adjusted for inflation, and wages have only slightly risen.

In acknowledgement of the low inflation, the central bank intends to carefully monitor progress towards its 2% target.

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