As you all know, at our December meeting the Federal Open Market Committee (FOMC) decided to raise the target range for the federal funds rate by 1/4 percentage point, to 1/4 to 1/2 percent. 1 At our meeting in January, we decided to maintain that range.
The increase in December came after seven years during which the FOMC had kept the federal funds rate between 0 and 25 basis points. This ultra-low rate was in keeping with our congressional mandate to pursue a monetary policy that fosters maximum employment and price stability, which we define as 2 percent inflation.