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Fed Bumps Up Interest Rate Again, Plans 3 More Increases in 2018
The key interest rate was raised a third time this year by the Federal Reserve, with indications that it will increase rates three more times in 2018. Nearly nine years into a recovery since the Great Recession, the central bank lifted its short-term rate by a modest quarter-point to a still-low range of 1.25% to 1.5%.
The Fed also plans to continue slowly shrinking its bond portfolio. The two steps could combine to usher in higher loan rates for consumers and businesses, as well as slightly better savings returns.
In the Fed’s view, the job market and U.S. economy remain on solid footing and are expected to further strengthen. If the rate bumps continue, three years from now the Fed’s target for short-term rates will reach 3.1%, which is slightly above its estimate of a long-term neutral rate of 2.8%.
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