Fed finally lifts key interest rate from near zero
WASHINGTON - The Federal Reserve is raising interest rates after seven years of record lows. But it's signaling that further rate hikes will likely be made slowly as the economy strengthens further and muted inflation rises.
The Fed's move to lift its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent ends an extraordinary seven-year period of near-zero rates that began at the depths of the 2008 financial crisis. Consumers and businesses could now face modestly higher rates on some loans.
The Fed's action reflects its belief that the economy has finally regained enough strength 6½ years after the Great Recession ended to withstand higher borrowing rates. But the statement announcing the rate hike said the committee expects "only gradual increases" in rates going forward.
Shortly after the announcement, major banks began announcing that they were raising their prime lending rate from 3.25 percent to 3.50 percent. The prime rate is a benchmark for many types of consumer loans such as home equity loans.
Wells Fargo was the first bank to announce the rate hike.