The Federal Reserve hiked its benchmark interest rate a quarter point Wednesday, upped its anticipation for economic growth this year and next, and provided a road map of what lies ahead through 2021.
As widely anticipated, the policymaking Federal Open Market Committee increased the fed funds rate 25 basis points. That now takes the rate to a range of 2 percent to 2.25 percent, where it last was in April 2008. This is the eighth increase since the Fed began normalizing policy in December 2015.
The funds rate serves as the baseline for multiple forms of consumer debt as well as savings accounts and CD rates. The funds rate increase will be felt immediately in the prime rate and increase credit card charges, but its impact in other areas usually is more incremental.
Along with the rate increase, the FOMC continued to project one more hike before the end of the year and three in 2019.
The Fed had kept its target rate anchored near zero from December 2008 until this hiking cycle began as it sought to bring the economy out of the financial crisis slump. Since then, the central bank has sought to normalize policy through consistent but gradual increases.