With the U.S. economy growing at a fast clip and its financial footing on solid ground, the Fed announced on December 13, 2017 that it will raise interests rates a quarter of a point. This is the third time this year that the Fed has raised interests rates, surpassing the number of rate increases in the previous nine years combined.
The benchmark federal funds rate will now be between 1.25% and 1.5%. The increase means that borrowers may see higher rates on mortgages, consumer loans, and credit cards.
The historically low interest rates that American borrowers have enjoyed since December 2008, when the Fed slashed the rate to nearly zero, may be coming to a slow end as the Fed's confidence in the U.S. economy grows.
And borrowers can expect interest rates to continue to rise. The Fed currently projects that three more hikes in 2018 and then three more hikes in 2019, eventually rising to a long-run level of 2.8%.
Barring a slip in financial footing for the U.S. economy, today may be the lowest interest rates consumers are likley to see for years to come. In 2017 alone the rate has climbed from .5-.75 range to 1.25-1.50.