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Fed Raises Rates, Boosts Outlook for Next Year's Borrowing Costs

Inflation expectations have increased 'considerably,' according to the Fed.

By Jeanna Smialek, Bloomberg | Updated on December 14, 2016

Federal Reserve officials raised interest rates for the first time this year and forecast a steeper path for borrowing costs in 2017, saying inflation expectations have increased “considerably” and suggesting the labor market is tightening.

The Federal Open Market Committee cited “realized and expected labor market conditions and inflation” in increasing its benchmark rate a quarter percentage point, according to a statement Wednesday following a two-day meeting in Washington. New projections show central bankers expect three quarter-point rate increases in 2017, up from the two seen in the previous forecasts in September, based on median estimates.

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