The U.S. Federal Reserve is raising its key interest rate for the fourth time this year to reflect the economy’s continued strength, but signals it expects to slow its pace of hikes next year.

The quarter-point hike, to a range of 2.25 per cent to 2.5 per cent, lifts the Fed’s benchmark rate to its highest point since 2008. The increase will mean higher borrowing costs for many consumers and businesses.

The Fed’s policy statement says “some” further gradual rate increases are likely. But its updated forecast projects just two rate hikes next year, down from the three that the Fed had predicted in September.

In another sign of fewer rate hikes in the future, the new forecast trims the long-run level for the Fed’s benchmark rate to 2.8 per cent, down from three per cent.

CBCNews.ca will carry a live feed during which reasons for the rate hike will be discussed, starting at 2:30 p.m. ET.



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