As expected, the Federal Reserve Board moved to boost its interest rate a quarter-point, citing continuing "moderate" expansion of the economy, increasing employment and low unemployment, as well as a lower than expected inflation rate.
And the Fed's Open Market Committee left the door open for future increases depending on market conditions, but it cautioned that its federal funds rate "is likely to remain, for some time, below" long-run expectations.
The target rate is now set at 1/2 percent to 3/4 percent.
Meanwhile, the Fed estimated economic growth to be 1.9 percent as this year ends, rising to 2.1 percent in 2017. However, longer run projections put the Gross Domestic Product growth rate at 2.0 percent in 2018 and fading to 1.9 percent in 2019.
Whether Fed's strategy of boosting interest rates to prevent overheating of the economy will work or instead stall the already slow recovery is an open question. Either way, the Fed is still keeping rates relatively low in order to encourage growth in the economy, which has been slow since the Great Recession of 2008-2009. But spending practices of the incoming Republican administration will very likely influence the Fed's future decisions.
Which way, however, remains to be seen.
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