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US Central Bank Boosts Interest Rates

  • VOA News

Federal Reserve Board Chair Janet Yellen answers a reporter's question during a news conference about the Federal Reserve's monetary policy, Dec. 14, 2016, in Washington.

U.S. central bank officials raised the key U.S. interest rate slightly Wednesday and said further increases will come at a "gradual" pace.

U.S. central bank officials raised the key U.S. interest rate slightly Wednesday and said further increases will come at a "gradual" pace.

The Fed now appears likely to boost rates a couple of times over the next year.

This quarter of a percentage point (0.25) increase (to a range between one-half [0.50] and three-quarters-of-one-percent [0.75] ) is still low by historic standards. It is the first rate increase in a year.

During the recession, the U.S. Federal Reserve slashed the rates to nearly zero to boost economic growth by making it cheaper to borrow money needed to buy homes, build factories and hire people.

Economists say the U.S. job market and housing sector have largely recovered from the recession and no longer need so much help.

Experts say keeping interest rates too low for too long leaves the Fed without the tools it needs to bolster the economy when the next downturn hits. It also raises the risk of sparking strong inflation that could hurt the economy.

Federal Reserve Chair Janet Yellen says U.S. economic growth will speed up slightly and hit 2.1 percent next year, while the unemployment rate will change little and be about 4.7 percent a year from now.

Yellen says her colleagues expect inflation will accelerate slightly to hit 1.9 percent next year.

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