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Fed Ups Key Rate Quarter Point, Two More Bumps Coming This Year
The Federal Reserve, believing the economy is strong, increased its key short-term interest rate on Wednesday by a modest quarter-point to a still-low range of 1.5% to 1.75%. The money policy board indicated it plans to continue its gradual approach to rate hikes for 2018 under new chairman, Jerome Powell, including two more rate hikes this year.
The group increased its estimate for rate hikes in 2019 from two to three, which reflects a more optimistic expectation for growth and low unemployment. The Fed also indicated it plans to keep shrinking its bond portfolio, which taken together could drive up loan rates over time for businesses and consumers.
Those actions and forecasts reflect the Fed’s belief that the economy remains on solid footing nearly nine years after the Great Recession ended. It was the sixth rate hike since the Fed began tightening credit in December 2015.
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