After the 2008 financial crisis, the U.S. economy was on very unstable grounds. Thus, in order to encourage investment, the Federal Reserve, under Ben Bernanke, decreased interest rates to zero percent. Bernanke, however, never expected rates to stay that low for so long. Now, under new Chairwoman Janet Yellen, the Federal Reserve has, in an historic decision, decided to increase various interest rates, as their faith in the growth of the United States economy has been satisfied. The raise of interest rates signifies the end of the Federal Reserve's stimulus program, and a new era for the American economy.
According to the New York Times, The Fed will raise rates to a range between 0.25 and 0.5 percent. According to representatives of the Federal Reserve, the central bank will continue to increase interest rates incrementally over the next few years if the economy continues to grow. As the Times reports, "Short-term rates will rise by about one percentage point a year for the next three years, Fed officials predicted."
Chairwoman Janet Yellen said of her decision, "The economic recovery has clearly come a long way, although it is not complete." The Fed's caution has helped keep the economy afloat since the beginning of the recession, and thus, Yellen does not want to raise rates in a cavalier nature. Yellen continued, saying, "recognizes the considerable progress that has been made toward restoring jobs, raising incomes and easing the economic hardships that have been endured by millions of ordinary Americans,"
Regarding the decision, Senator Bernie Sanders of Vermont (who is running for the Democratic nomination for the presidency), said, "When millions of Americans are working longer hours for lower wages, the Federal Reserve's decision to raise interest rates is bad news for working families. The Fed should act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago."
However, many have celebrated the decision, including Representative Jeb Hensarling of Texas, who is the chairman of the House Financial Services Committee. Hensarling said, "Unsustainably low interest rates clearly didn't solve the problem, or else Americans today wouldn't be stuck in the slowest, worst-performing economic recovery of our lifetimes."
