The Board of Governors of the Federal Reserve System (the Fed) decided to raise the interest rate by 25 basis points (bps) to 0.75 percent at the FOMC meeting held on December 13-14, 2016. This was the second rate hike since June 2006.
Throughout 2017, the Fed projected a further interest rate increase of three times in its dot plot projections. Similarly, three rate hikes were projected for 2018.
The expectation of rising inflation and improving employment in the United States were among the reasons for the Fed's decision to raise its benchmark interest rate, amidst the negative interest rates implemented by several other advanced economies' central banks, such as Japan.
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