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Federal Reserve, buoyed by stronger economy, lifts rates again

The Federal Reserve on Wednesday raised interest rates one notch higher as the U.S. economy continues to get healthie...

Posted: Dec 14, 2017 12:28 AM
Updated: Dec 14, 2017 12:28 AM

The Federal Reserve on Wednesday raised interest rates one notch higher as the U.S. economy continues to get healthier.

The rate hike, which was widely expected, was the third this year.

Policy makers pointed to the lower number of unemployed workers, increased spending by households, and bigger investments by businesses in recent quarters.

"The labor market has continued to strengthen and ... economic activity has been rising at a solid rate," the Federal Open Market Committee said in a statement following its two-day meeting.

The federal funds rate, which helps determine rates for mortgages, credit cards and other borrowing, will now hover in a range of 1.25% to 1.5%. Overall, rates are still historically low.

Related: Tax cuts could make it harder to fight the next recession

Two Fed officials dissented on the decision: Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari, who felt policy makers should wait longer before raising rates again.

This is the fifth time the Fed has lifted interest rates since the 2008 financial crisis. Policy makers plan to raise rates three more times in 2018, and then twice in 2019.

Central bankers, under the leadership of outgoing Fed chair Janet Yellen, have moved patiently to maintain economic growth at a steady pace. They have kept a watchful eye on inflation, which has run below expectations.

President Trump nominated Fed governor Jerome Powell in November to take over when Yellen ends her four-year term on February 3. It's largely expected that Powell will stick to a playbook similar to that of his predecessor, who was named to the post by former President Obama. Yellen was the first woman to serve in the role.

Related: America's wealth gap is bigger than ever

Top Fed officials have been mystified about why inflation, which reflects the prices of everything from meat and cheese to houses and cars, has fallen short of the Fed's goal of 2%. That's what the Fed considers healthy for the economy.

In deciding to slowly raise rates over the past year or so, the Fed has weighed competing forces. Stubbornly low inflation and consumer prices suggested the Fed should hold off on raising rates. But steady economic growth and low unemployment suggested it should act.

Yellen has described inflation as something of a "mystery" but has signaled she expects it will stabilize over time.

Related: Tax overhaul could mean major changes to your paycheck

It's the job of central bankers to shift policy levers, nudging interest rates higher and lower, to boost jobs and keep prices, or inflation, at the optimal level. That means not too high, and not too low.

When inflation is too low, it can hurt the economy. Businesses get queasy about investing in people and equipment. If prices don't rise, wages don't either.

Some Fed officials have warned against raising interest rates until inflation meets its target.

On Wednesday, the Fed said it continues to expect inflation to remain below its target, at 1.7%, and the unemployment rate to be 4.1%, based on its updated economic projections.

Policy makers raised their expectations for economic growth in 2018. The central bank now expects the economy to grow at a slightly faster rate of 2.5%, compared with a previous forecast of 2.4%.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 38569

Reported Deaths: 1511
CountyConfirmedDeaths
Hennepin12456787
Ramsey4911228
Dakota238291
Stearns237119
Anoka2241109
Nobles16696
Olmsted112915
Washington111440
Mower9522
Rice8447
Scott7344
Clay58738
Kandiyohi5731
Blue Earth4792
Wright4755
Todd4012
Carver3811
Sherburne3175
Lyon3162
Freeborn2920
Watonwan2340
Steele2311
Benton2173
St. Louis18015
Martin1695
Nicollet16912
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Goodhue1318
Winona12515
Crow Wing10612
Pine1050
Le Sueur1031
Chisago1001
Otter Tail951
McLeod920
Carlton870
Dodge870
Polk822
Chippewa791
Unassigned7837
Isanti730
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Morrison591
Becker560
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Pennington510
Renville352
Mille Lacs342
Wabasha330
Brown312
Rock310
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Houston260
Swift221
Wilkin213
Norman200
Redwood180
Cass162
Roseau160
Aitkin150
Big Stone150
Koochiching151
Wadena150
Kanabec141
Grant120
Marshall120
Lincoln100
Pope100
Mahnomen91
Clearwater80
Hubbard70
Lake60
Traverse60
Lac qui Parle40
Stevens40
Red Lake30
Kittson20
Cook10
Lake of the Woods00

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 31670

Reported Deaths: 722
CountyConfirmedDeaths
Polk6638179
Woodbury325244
Black Hawk230158
Buena Vista171411
Johnson13148
Linn129482
Dallas128029
Marshall104919
Scott81510
Story7793
Pottawattamie73612
Wapello70830
Dubuque70222
Crawford6772
Muscatine64344
Sioux4770
Tama46529
Wright3861
Louisa36213
Jasper32517
Plymouth3225
Warren2901
Dickinson2663
Washington2439
Webster2292
Hamilton1891
Cerro Gordo1821
Boone1481
Clay1340
Clarke1322
Allamakee1314
Mahaska11617
Shelby1140
Clinton1121
Poweshiek1068
Carroll991
Pocahontas971
Bremer946
Des Moines922
Franklin900
Emmet880
Henry863
Cedar841
Taylor790
Hardin770
Monona770
Cherokee751
Floyd732
Marion700
Benton691
Guthrie664
Jefferson640
Sac640
Osceola620
Jones610
Butler572
Buchanan551
Humboldt551
Hancock540
Harrison540
Lee542
Calhoun532
Iowa530
Delaware511
Fayette510
Monroe516
Madison482
Clayton443
Lyon440
Davis411
Palo Alto410
Mitchell390
Winneshiek390
Grundy380
Mills370
Kossuth350
Howard340
Jackson320
Lucas314
Greene300
Chickasaw290
Union290
Winnebago290
Ida240
Cass230
Van Buren220
Appanoose213
Keokuk211
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Worth200
Unassigned170
Adair160
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