Interest rates are nudging up again. Fed Reserve Chairman Jerome Powell says it's in response to a growing economy and aimed at keeping a lid on inflation.
“This decision marks another step in the ongoing process of gradually scaling back monetary policy accommodation, a process that has been underway for several years now,” Powell said Wednesday.
The central bank is still on track to raise short term interest rates two more times this year.
“Compared with the projects made in December, real GDP growth is stronger, the unemployment rate is lower and inflation is slightly higher,” Powell added.
Greg McBride, chief financial analyst for BankRate, says Powell is continuing the path laid out by former Fed chair Janet Yellen, but warns a much different Fed Board is on the horizon once the President Donald Trump begins filling vacancies.
“The makeup of the Fed is something that is changing and may well continue to change over the course of the year and I think that represents the biggest risk of a change in stance to a more aggressive tack,” he says.
In the meantime, McBride warns consumers to get their debt under control.
“If you have variable rate debt like credit cards or home equity lines of credit, pay those down, refinance into fixed rates, grab those low-rate balance transfer offers.”