New York, NY—February 6, 2017—The Federal Reserve on Tuesday increased its key interest rate, adding to the nation’s economic recovery and boosting job creation.
The Federal Open Market Committee’s decision to hike the overnight federal funds rate by a quarter point to 1.25% from 1% on Wednesday was a further indication of Fed patience and a sign of the Fed’s determination to keep interest rates near zero for the long haul.
The increase in the overnight rate is a first step towards further easing, and the Fed has said it will continue to do so.
The Fed’s decision also adds to a stronger recovery in the US economy and a broader strengthening of the US dollar, which is a key driver of global demand for US exports.
The dollar rose 0.2% against the greenback after the Fed cut its key rate to a record low of 0.75%.
The move, the latest step by the Fed to ease monetary policy, came as the central bank said it would raise rates again on Tuesday, the day after a report showed that the number of Americans without jobs in February rose to its highest level since December 2009.
Fed Chair Janet Yellen is expected to release her first rate increase in more than a decade on Wednesday, the Fed said in a statement.
The decision by the Federal Reserve to raise rates in the past few weeks is a signal of its commitment to a rate rise in the near term.
Fed Chairman Ben Bernanke said in February that the Fed would begin raising rates again in January, and this is the first time since then that the central bankers have decided to do that.
The Fed has been buying trillions of dollars of Treasuries and mortgage-backed securities as it tries to stimulate the economy, but it has had to wait more than two years to raise its benchmark interest rate.
The central bank has said that its actions to help the economy in recent months have had a positive effect on consumer spending and inflation, and it has also boosted lending and investment.
Since the central banks first moved to raise interest rates in late 2015, the economy has expanded by an annual average of 2.9%, and the unemployment rate has fallen to 6.5%.
The Federal Bureau of Statistics reported Tuesday that median household income increased by 2.3% in February.