Interest rates are moving up again. The Federal Reserve boosted the short-term lending rate by a quarter percent.
The move led to a slide in technology stocks which pulled down the Nasdaq and S&P 500 ended slightly lower.
“Our decision to make another gradual reduction in the amount of policy accommodation reflects the progress the economy has made and is expected to make toward maximum employment and price stability objectives,” Fed Chairwoman Janet Yellen said Wednesday.
“Household spending continues to rise at a moderate pace, supported by income gains and by relatively high levels of consumer sentiment and wealth,” she added.
The increase in the Fed’s short-term rate by a quarter-point to 1.25 percent could lead to higher borrowing costs for consumers and businesses and slightly better returns for savers. It's the third rate hike in seven months.
The Fed foresees one additional rate hike this year but gave no hint of when that might occur.
“Overall, we continue to expect the economy will expand at a moderate pace over the next few years,” said Yellen.
The Fed said it would eventually allow a small amount of bonds to mature without being replaced — an amount that would gradually rise as markets adjusted to the process. This process could put upward pressure on long-term borrowing rates.