US Central Bank Raises Interest Rates

Leaders of the U.S. central bank raised interest rates slightly Wednesday and signaled that rates are likely to go higher as the economy continues to strengthen.

At the end of two days of deliberation in Washington, the Federal Reserve set the key interest rate a quarter of a percent higher, at a range between 1.75 and 2 percent. They say the labor market continues to improve, spending is rising, and inflation is rising closer to the modest 2 percent annual rate that experts say helps the economy grow predictably.

Fed officials work to maximize employment while maintaining stable prices. With that in mind, they slashed interest rates to nearly zero during the recession in 2008 to boost economic activity. Now, they judge that it is time to continue raising rates because holding rates too low for too long could spark inflation, and such rapidly rising prices could harm the economy.


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