Fed: Rate hike is ‘appropriate’

By Andrew J. Tobias December 06, 2014 09:57:50The U.S. Federal Reserve raised its key interest rate on Wednesday for the first time in nearly a year and signaled that it was unlikely to raise rates further for the foreseeable future.

The central bank said it would continue to make the decision on its next round of monetary policy decisions as the economy remained “challenging.”

The rate increase would be the first for the U.N. global lender since December 2011.

The Fed raised its benchmark overnight interest rate to 2.25 percent from 1.75 percent on Tuesday, which it said would reduce the risks to the U:U.S., U.K., European Union, and Asian economies are suffering through a prolonged period of stagnation.

The bank has repeatedly signaled it will keep interest rates low to keep inflation low and to provide a buffer against a weaker dollar.

It has cut its benchmark lending rate for five straight months, from 2.75 to 1.25 per cent.

The announcement was made in a statement announcing the policy changes.

“The Federal Reserve has indicated that it may delay its next interest rate decision for a period of time.

The committee will evaluate the merits of those factors as it develops its next policy decision,” the statement said.

“We continue to be encouraged by the progress that we have made over the past month and continue to expect continued progress.”

The statement also noted that the Fed has been buying bonds to provide liquidity to the economy.

The statement said the U’s economy is expected to contract 0.2 percentage point in the second quarter.