Citing healthy momentum in the U.S. labor markets and confidence that inflation is starting to climb upward toward the Fed’s 2% target, the Fed pulled the trigger on the first rate hike in nearly a decade.
After seven years of rock-bottom interest rates held low to stanch the bleeding from the worst financial crisis since the Great Depression, and after months of unusually public hand-wringing over the precise timing of liftoff, the Federal Reserve on Wednesday approved a rate hike intended to start easing U.S. monetary policy back to normal.
The historic decision marks the final break from an era of unprecedented interventionist monetary policy initiated in the wake of the 2008 financial crisis.
The policy-setting Federal Open Market Committee voted unanimously to raise rates by 0.25% to a range of 0.25%-0.50%, not a whole lot but enough to test the still-weakened U.S. economy’s ability to absorb the higher borrowing costs that will follow the increase.
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