The Federal Reserve is hiking interest rates a quarter-point, and signaled three more hikes in 2017.
The latter forecast is up from two expected hikes announced in previous meetings.
“In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1/2 to 3/4 percent," the Fed said in a statement.
The markets reacted immediately, with the Dow dropping about a 100 points.
The Fed expects “some” further strengthening in labor markets in the future, it added in the statement, noting that market-based measures of inflation “have moved up considerably.”
The statement said risks to the outlook appear “roughly balanced,” marking no change from its November assessment. There were no dissents to the decision.
“My colleagues and I are recognizing the considerable progress the economy has made toward our dual objectives of maximum employment and price stability," Fed Chairwoman Janet Yellen said following the announcement.
The Fed has been in contact with the Trump transition team, Yellen said, providing no further details. She was careful to remain neutral on tax-cut ideas floating around the Beltway with the Republicans now in charge.
“With a 4.6 percent unemployment, and a solid labor market, there may be some additional slack in labor markets, but I would judge that the degree of slack has diminished. So I would say at this point that fiscal policy is not obviously needed to provide stimulus to help us get back to full employment," she said.
"But nevertheless, let me be careful that I am not trying to provide advice to the new administration or to Congress as to what is the appropriate stance of policy. There are many considerations that Congress needs to take account of, and many bases for justifying changing fiscal policy.”
Yellen re-iterated her plan to serve the remainder of her four-year term, which concludes in January 2018. On the campaign trail, Trump vowed to fire Yellen if elected.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at email@example.com.
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