WASHINGTON–As expected the Federal Open Market Committee at its meeting today moved to increase rates by a quarter-point to a range of 1.25% to 1.50%.
In a statement accompanying the announcement, the Federal Reserve said data from November indicate the labor market has continued to strengthen and that economic activity has been rising at a solid rate.
“Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further,” the Fed said. “Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, both overall inflation and inflation for items other than food and energy have declined this year and are running below 2%. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”
The Committee said it continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to remain somewhat below 2% in the near term, but to stabilize around the Committee's 2% objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee added it is monitoring inflation developments closely.
Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Randal K. Quarles. Voting against the action were Charles L. Evans and Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal fund's rate.
The increase is the fifth by the Fed since the financial crisis of 2008.
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