Fed Raises Rate, First Time Since 2006

The U.S Federal Reserve voted (10-0) to raise interest rates by a quarter point. This is the first rate increase in more than 9 years. The Federal Reserve raised the federal funds rate to a range of .25% to 0.5%. The “loose tightening” is a sign that the era of zero interest rate policy (ZIRP) in the United States is over.

Interesting commentary from the press release, “The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”

Voting for the FOMC monetary policy action were:

    Janet L. Yellen, Chair
    William C. Dudley, Vice Chairman
    Lael Brainard
    Charles L. Evans
    Stanley Fischer
    Jeffrey M. Lacker
    Dennis P. Lockhart
    Jerome H. Powell
    Daniel K. Tarullo
    John C. Williams

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