Fed Funds Target Raised by 25 Basis Points as Expected

December 14, 2016

The Federal Open Market Committee agreed unanimously to raising the interest rate target range to 0.5-0.75%. The released statement speaks of moderate growth but with continuing soft business investment. Note is made of a strengthening labor market and rising inflation, which is projected in newly released forecasts to be 1.9% next year and at the 2.0% target in both 2018 and 2019. The median appropriate federal funds rate is projected by committee members to climb to 1.375% next year, 2.25% in 2018 and 3.0% in 2019 where such then plateaus. That would be 225 basis points below the peak of the previous tightening cycle attained in mid-2006.

Copyright Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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