The Federal Reserve on Wednesday raised the federal funds rate another quarter-point, lifting the target to 1% to 1.25% in the second of three expected hikes in 2017.
Citing recent inflation declines, greater household spending, and a steady job market, the Fed voted nearly unanimously to increase the interest rate; as in March, when rates rose from 0.75% to 1.0%, Minneapolis Fed president Neel Kashkari was the lone holdout.
If predictions hold, the Fed will raise rates one more time before 2017 is out as the economy continues its recovery from the housing crisis that began more than a decade ago. The federal funds rate, which in turn influences interest rates on everything from credit cards to savings accounts to reverse mortgages, had been historically low since the depths of the recession, when the Fed attempted to jumpstart the economy by providing access to cheap, easy credit: The target had sat at 0% to 0.25% from December 2008 all the way to December 2015. For reference, borrowers and savers saw interest rates of nearly 20% in June 1981.