WASHINGTON — (AP) The Federal Reserve is hiking a key interest rate for the second time this year and is planning to reduce the size of its $4.5 trillion balance sheet as well.
Fed officials voted 8-1 to raise the federal funds rate to a range of 1 to 1.25 percent. The rate sets what banks can charge each other for overnight loans and influences the availability and flow of money in the U.S. economy. Only Neel Kashkari, president of the Minneapolis Fed bank, opposed the increase.
The Fed also says it expects to begin reducing its balance sheet this year “provided the economy evolves broadly as anticipated.” This would reduce its holdings of Treasury and mortgage-backed bonds, which they acquired in the wake of the financial crisis to support economic growth. Fed officials project growth of roughly 2 percent in 2017.
Copyright 2017 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. (photo: CNN)
