WASHINGTON The Federal Reserveraised its benchmark interest rate on Wednesday, a sign of growing confidence in the economy that is likely to pinch consumers and businesses and provide a modest boost to lenders and savers. The central bank's Federal Open Market Committee increased the target federal funds rate what banks charge one another for overnight lending - by 0.25 percentage point, to a range of 0.5 percent to 0.75 percent. Banks use the federal funds rate as a benchmark for interest rates they charge on other forms of credit from auto loans to some housing loans giving the rate deep economic influence. Increasing the benchmark rate will probably raise the cost of borrowing for Americans with outstanding loans, whether they are homeowners or operators of small businesses. At the same time, higher interest rates are likely to fatten the profits of banks that lend to these borrowers, and increase the returns of savers, including retirees who depend on interest-bearing bank accounts. The Fed raises the key rate to tame inflation by putting downward pressure on job market growth. Ensuring price stability is one of the central bank's two congressionally mandated missions, along with maximizing employment. 'My colleagues and I are recognizing the considerable progress the economy has made toward our dual objectives of maximum employment and price stability,' Federal Reserve Chairwoman Janet Yellen said at a press conference following the announcement of the interest rate increase. Anadolu Agency/Getty Images Wednesday's move was only the second increase in the federal funds rate since the 2008 financial crisis.At the time of the in December 2015, the median prediction of the 17 Federal Reserve Board governors and regional Federal Reserve bank presidents was that the federal funds rate would reach by the end of 2016. influencing the November electionThe official unemployment rate is now. Yellen also noted that a measure of prices that filters out the volatile cost of food and energy grew 1.7 percent in the 12-month period ending in October. A version of that metric that many experts consider more exact rose only1.5 percent over that same period.
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