Mubasher: The United States Federal Reserve has decided on Wednesday to raise interest rates by 25 basis points, in a move that was widely expected.

The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate to 1.75% to 2%.

The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to the targeted inflation rate at 2%, according to the Fed’s statement.

The statement noted that the information received since the last meeting in May indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate, as job gains have been strong in recent months, and the unemployment rate has declined to historic levels.

Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly, the statement noted.

FOMC seeks to foster maximum employment and price stability, and it expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the 2% objective over the medium term.

The Federal Reserve also noted that risks to the American economic outlook appear roughly balanced.