The Federal Reserve raised its benchmark interest rate for the third consecutive quarter, from 1 percent to 1.25 percent.
The move marks an increase of a full percentage point since 2015 and represents the first time that the number is above 1 percent since 2008. When determining whether or not to raise rates, the Fed closely watches inflation and the jobs report.
The quarter of a percent increase is the second move in 2017. The Fed made a similar decision during its March meeting. While the decision is a sign that the Fed remains confident in the future of the American economy, not all members were on board for the hike.
The president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, voted against the hike, preferring to keep the rate at 1 percent, according to the Los Angeles Times. Kashkari was the only dissenting vote.
The unemployment rate dropped to 4.3 percent in May, its lowest level in 16 years. The labor force participation rate fell slightly to 62.7 percent, continuing to trend at its lowest rate since the late 1970s. (RELATED: May Jobs Report: Unemployment Rate Hits 16 Year Low)
“We continue to expect that the economy will expand at a moderate pace,” Federal Reserve Chair Janet Yellen said at a news conference following the hike.
While the unemployment rate continued to fall and rising wage growth coupled with job gains indicate an economy on the rise, sluggish growth in the average hourly earnings (2.5 percent) is cause for concern.
The president has focused on manufacturing jobs, a sector that has seen steady growth since his election. The business community has been vocal in its readiness to work with the president on infrastructure, tax, and regulatory reform.
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