US Federal Reserve raises short-term interest rates

By Barry Eitel

SAN FRANCISCO (AA) - The Federal Reserve announced Wednesday it would raise short-term interest rates for the third time in 2017.

The central bank said it would raise the federal-funds rate by about 0.25 percent to a range between 1.25 percent and 1.5 percent. The Fed believed that the economy is expected to grow throughout 2018.

In analyzing economic data, the bank said “the labor market has continued to gain strength and that economic activity has been rising at a solid rate.”

The Fed signaled it expected three interest rate increases next year.

“In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation,” the Fed said in its announcement. “The assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”

In what was likely her last announcement on interest rate hikes before leaving her position, Fed Chair Janet Yellen said she saw “nothing flashing red or possibly even orange” in risks to the country’s financial stability.

Yellen announced last month she would resign from the Fed’s Board of Governors after her term as chair ends in February.

President Donald Trump said he would not nominate Yellen for a second term head of the Fed, breaking with decades of tradition. Instead, he nominated Jerome Powell, a Republican on the Fed’s board.

During confirmation hearings before Congress, Powell said he planned to stay close to the path Yellen blazed during her tenure.

Yellen’s term as a governor was scheduled to end in 2024.

The Dow Jones industrial average grew about 0.57 percent in afternoon trading following the announcement, adding more than 140 points to 24,645.67.