The Federal Reserve announced a widely anticipated increase to the benchmark interest rate, the first in nearly a decade.
The increase—a boost of 25 basis points, or 0.25 percentage points—may have little immediate cost to borrowers. But for the first time in seven years, the rate of short term borrowing now hovers above zero. The move also cements the Federal Reserve’s confidence in the nation’s economic recovery, which has been halting at times and continues to be underwhelming for U.S. workers, who have not seen wages raise as a result.
“This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the economic recovery from the worst financial crisis and recession since the Great Depression,” said Federal Reserve Chairwoman Janet Yellen in a press conference announcing the decision.