US Fed raises key interest rate amid stronger growth outlook

The Federal Reserve today raised the key lending rate for the first time this year to its highest level in a decade, citing a stronger outlook for US economic growth.

Newly installed Fed Chairman Jerome Powell presided over his first meeting, which raised the federal funds rate to 1.5-1.75 percent, a move that will affect all types of loans, from homes to cars to student debt.

In his first press conference as Fed chief, Powell pointed to the factors that have boosted the economic outlook in recent months, including "more stimulative" fiscal policy, in the wake of the massive tax cuts Congress passed in December.

In addition, he said "ongoing job gains are boosting incomes and confidence (and) foreign growth is on a firm trajectory."
Still, Powell told reporters that even with rising interest rates, the world's largest economy is "healthier than it has been since before the financial crisis. It's a healthier economy than it has been in 10 years."
In fact, Powell said "there is no sense in the data that we are on the cusp of an acceleration of inflation."
While the Fed is "very alert" to any increases that could result from the very low unemployment rate, which normally would be expected to drive wage increases, "it's not something we observe at the present."
The Fed statement said monetary policy continues to provide stimulus to the economy, and repeated that even with "further gradual adjustments ... economic activity will expand at a moderate pace."
Central bankers admitted to being befuddled by the absence of inflation last year despite the economic recovery and strong job market, but today's statement repeated the view that 12-month inflation is expected to move up to the Fed's two percent goal "over the medium term."