Washington (AFP) – The US Federal Reserve on Wednesday raised the benchmark interest rate by a quarter percentage point as expected, citing an improving economy, after its first policy meeting since President-elect Donald Trump’s election victory.
The policy-setting Federal Open Market Committee voted unanimously to increase the key federal funds rate to a range of 0.5 to 0.75 percent, but repeated that it expects the economy will require only “gradual” increases going forward.
The rate increase from the previous range of 0.25 to 0.5 percent is the first hike since December 2015 and only the second in a decade.
In its report on US wholesale inflation, the Labor Department said the index for final demand producer prices grew 0.4 percent for November on a seasonally adjusted basis, surpassing an analyst forecast which foresaw an increase of only 0.1 percent.
The result pointed to an overall upward trend since sluggish summer months. Year-on-year, the index also posted its largest gain since November 2014, rising by 1.3 percent.
Berlina Uruci of Barclays said the increase should soon lead to higher consumer prices.
“Overall, this morning’s report gives more evidence of continued progress toward firmer pipeline pressures,” she said in a client note.