The Federal Reserve took note Wednesday of a strengthening U.S. economy and appears on track to raise interest rates this year for the first time in nearly a decade. But Chair Janet Yellen declined to say just when or how fast the Fed would act. In a statement after its latest policy meeting, the Fed noted that the job market, the housing industry and consumer spending are all improving. At the same time, it made clear it wants to see further economic gains and higher inflation before raising rates from record lows.
Even after the Fed begins raising rates, Yellen stressed at a news conference that it will likely do so very gradually.
Once the Fed begins raising short-term rates, the impact will range widely. Other rates – for mortgages, auto loans, corporate borrowing – could head higher. Stock and bond prices could be squeezed. All but two of its 17 policymakers signaled their belief that the Fed will raise its key short-term rate at some point this year. That rate has been held near zero since 2008. Many analysts predict that if the economy keeps improving, the Fed will raise rates in September.
This information was taken from a press release from the Associated Press on June 18, 2015.