Fed Hikes Rates, Anticipates Another Increase Before Year-end

The Federal Open Market Committee (FOMC) decided Wednesday to raise the federal funds target rate by a quarter-point to a range of 2 to 2.25 percent. This is the third rate hike this year.

In its press release, the committee said that the "labor market has continued to strengthen and that economic activity has been rising at a strong rate." In addition, it cited the low unemployment rate, and increased household spending and business fixed investments.

The FOMC said that on a "12-month basis, both overall inflation and inflation for items other than food and energy remain near two percent. Indicators of longer-term inflation expectations are little changed, on balance."

The Fed will continue to reduce its securities holdings by decreasing its reinvestment of the principal payments from its holdings of Treasury securities and agency mortgage-backed securities.

The FOMC will meet again Nov. 7-8.