The United States central bank has raised an important interest rate by one-fourth of 1 percent. The move may have been small, but it marks the first time since late 2008 that the Federal Reserve has raised important interest rates that it controls. The federal funds rate, a rate paid by banks for short-term loans, is now one-half of 1 percent.
The Federal Reserve Open Market Committee decides monetary policy. The committee announced the change Wednesday in a statement on economic policy. It had met for two days in Washington. Janet Yellen, the first woman to lead the Federal Reserve System, spoke after the announcement.
The committee’s decision was based on a few factors, Yellen said. Economic growth is expected to continue in the U.S. Another reason to increase interest rates, Yellen noted, was the low official rate of inflation. The central bank has said its target inflation rate is 2 percent. It says that rate would help support employment and keep prices stable. However, inflation currently is not at the target rate.
