[Update 1: An earlier version of this article stated the rate was raised from 0.25% to 0.75%. The rates raised 25 basis points, to range from 0.5% to 0.75%]
The Federal Open Market Committee announced in its highly anticipated December meeting that it is finally raising the federal funds rate for the first time since exactly a year ago.
In a statement released Wednesday by the Federal Reserve, the FOMC voted unanimously to raise the target range for the federal funds rate from 0.5% to 0.75%, effective Dec. 15, 2016.
The Fed stated that this move to raise interest rates supports further strengthening of labor market conditions and a return to 2% inflation.
“Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year,” the statement said.
“Job gains have been solid in recent months and the unemployment rate has declined. Household spending has been rising moderately but business fixed investment has remained soft,” it continued. “Inflation has increased since earlier this year but is still below the Committee’s 2% longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.”
When the Fed raised the federal funds rate last December it announced it would gradually raise the federal funds rate to a range of 0.25% to 0.50%. The rise last year marked the first increase since June 2006.
This increase doesn’t come as a surprise though, with odds from several sources saying there’s 100% chance that the Fed would increase rates. The minutes from the November meeting certainly seemed to point in that direction.