The Federal Reserve on Wednesday lifted a key short-term interest rate for the second time in three months, but in a sign of caution, the central bank stuck to its forecast for just two more rate hikes this year.
The bank’s policy committee voted 9-to-1 to raise the fed funds rate to a range of 0.75% to 1%. The cost of borrowing for mortgages and most other loans for businesses and consumers are tied to the benchmark rate.
The Fed pointed to a steadily growing economy, improving labor market and a recent uptick in inflation that’s “moving close” to its 2% target to justify its decision.
U.S. retail sales in February posted the smallest gain in six months, indicating a tempering of the consumer spending that’s been carrying the economy.
Purchases rose 0.1 percent, matching the Bloomberg survey median estimate, after a 0.6 percent increase in the prior month that was stronger than previously reported, Commerce Department figures showed Wednesday. Just four of the 13 major retail categories saw gains in February sales.
U.S. producer prices increased more than expected in February as the cost of services such as hotel accommodation pushed higher and the year-on-year gain was the largest in nearly five years, pointing to steadily rising inflation pressures.