The Federal Reserve signaled confidence in a strong economy Wednesday with its second interest rate hike of 2017, bringing its benchmark rate up a quarter-point to push it over 1% for the first time since the 2008 financial crisis. The move, which brings the range to between 1% and 1.25%, had been seen as almost a certainty, and investors were more intrigued by Fed chief Janet Yellen's plan to start rolling back the $4.5 trillion balance sheet, which it packed with government bonds and mortgage-backed securities in an effort to offset the crisis, the Street reports. It was below $900 billion in 2007. Yellen said the balance sheet would be gradually rolled back in a process that would be as exciting as "watching paint dry."
The interest rate hike "reflects the progress the economy has made and is expected to make toward maximum employment and price stability," Yellen told reporters Wednesday, pointing to job gains and moderate rises in economic activity. The Fed admitted that inflation is below its 2% target and is likely to stay there in the near term, Forbes reports. Analysts tell the Washington Post that many people are unlikely to notice the effects of the rise in rates, though people with large mortgages or a lot of credit card debt may start to feel the pinch. "For those where budgets are tight and their debt burdens have been growing the last few years, this is where the signs of strain begin to emerge," says Greg McBride at Bankrate. (Read more Federal Reserve stories.)