Fed raises interest rates for third time in 2017

The Federal Reserve raised interest rates Wednesday for the third time this year and likely for the last time under Fed Chairwoman Janet Yellen.

The Federal Open Markets Committee raised benchmark interest rates a quarter of a point, to between 1.25 percent and 1.5 percent.

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The Fed last hiked rates in June as part of an effort to peel back the massive cuts meant to boost the economy though the 2008 recession.

The Fed is unlikely to raise rates again under Yellen, a Democrat who is set to leave the bank in February upon the nearly certain confirmation of Fed Governor Jerome Powell as the next chairman.

Powell, a Republican, unanimously voted with Yellen on a slow increase in interest rates during his five years on the Fed board since 2012.

The Fed board also said it continues to expect to raise rates three times in 2018. Powell is likely to continue Yellen’s moderately paced rate hikes, though low inflation or the effects of a successful GOP tax plan could force him to change course.

The central bank predicted greater economic growth over the next three years than it had projected in April. The Fed expects the U.S. gross domestic product to increase 2.5. percent in 2018, versus its September projection of 2.1 percent. It also projects unemployment to dip to 3.9 percent next year and in 2019, 0.2 percent lower than September’s forecast.

The Fed projects a long-range average growth rate of 1.8 percent per year, unchanged from September, before the Republicans closed in on passing a massive overhaul of the tax code. That bill could pass both chambers by next week, and be signed into law before Christmas.

Yellen will answer reporters’ question Wednesday afternoon, possibly for the last before she leaves the Fed. Appointed by President Obama to be the Fed’s first female chair in 2014, Yellen will depart the bank after guiding the U.S. economy out of the recession. Unemployment plummeted under her leadership and she had been widely praised by economists across the spectrum.

–This report was updated at 2:12 p.m.