Since the 2008 financial crisis, the Federal Reserve has kept key interest rates near zero percent in hopes of spurring the economy.
During a press conference on Wednesday, Janet Yellen, chair of the Federal Reserve, announced that interest rates would be raised. This is only the second raise in rates since the financial crisis began.
The move is a result of the Fed's confidence in the economy. Specifically, Yellen said:
“My colleagues and I are recognizing the considerable progress the economy has made. We expect the economy will continue to perform well.”
Not everyone believes the Fed is timing the rate hike well. In an article at The New York Times, Rep Roger Williams (R-TX) called the move “premature”:
“Today’s decision by the Fed to raise the interest rate is entirely premature and will be burdensome to a nation already struggling to pull itself out of this slow-growth Obama economy”
“By making rates even higher, the Fed is effectively making our hardships even harder.”
A separate article in The New York Times notes that the rate hike could impact many Americans in terms of credit and borrowing, including buying a home, consumer credit costs, and student loans. This may worry some, but the rate hike is an indication of a stronger, growing economy.
As Dean Baker, co-director of Center for Economic and Policy Research put it:
“Nobody in their right mind would say, ‘I’d rather have higher unemployment and lower interest rates.’ Nobody wants to pay a higher interest rate, but I think that’s an easy choice for most people.”
The full statement by the Federal Open Market Committee explaining its reasoning behind the rate hike can be found here.