US Fed raises interest rates again

Jarrod Sierocki

WSJ’s Jon Hilsenrath explains why the Federal Reserve’s decision Wednesday to raise short-term interest rates signals a new tightening phase due to the healthy economy. Photo: EAP

Federal Reserve Chair Janet Yellen has presided over another rate rise. Picture: AP

THE US Federal Reserve has raised its benchmark interest rate for the third time in six months, providing its latest vote of confidence in a slow-growing but durable economy.

The Fed also announced plans to start gradually paring its bond holdings later this year, which could cause long-term rates to rise.

The increase in the short-term rate by a quarter-point to a still-low range of 1 per cent to 1.25 per cent could lead to higher borrowing costs for consumers and businesses and slightly better returns for savers.

The central bank chose to raise rates again despite an economic slowdown at the start of 2017, which it predicts will prove temporary. It foresees one additional rate hike this year, unchanged from its previous fore…

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