WASHINGTON — The Federal Reserve has raised a key interest rate to its highest point in years, citing a stronger economy and substantial job gains.
The Federal Open Market Committee (FOMC) of the Federal Reserve System voted unanimously to raise the federal funds rate, the interest rate at which banks lend to other banks, to between 1½ and 1¾ percent at a March 21 meeting.
It also voted to increase the primary credit rate to 2¼ percent. Both rates go into effect March 22, the FOMC said.
This marks the first time the Federal Reserve has raised interest rates under its new chairman, Jerome Powell, who took office in February, succeeding Janet Yellen.
In announcing the rate hikes, the FOMC said it found that the U.S. economy has continued to grow moderately since the committee's last meeting in January.
"Job gains have been strong in recent months, and the unemployment rate has remained low," the FOMC said. Household spending and business investment, however, have moderated since their strong showings in the fourth quarter of 2017, it said.
"The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate," the FOMC said.
However, that rate is likely to remain under traditional levels for some time, it said.