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Federal Reserve policymakers have raised their target for the benchmark federal funds interest rate by a quarter-point, to a range of 1 percent to 1.25 percent.

Despite the increase — the fourth since December 2015 — interest rates remain near historic lows, but the move will mean higher borrowing costs for consumers. The Fed previously raised rates 

 and has signaled plans for two more increases this year.

, the policymakers said that "the labor market has continued to strengthen and that economic activity has been rising moderately so far this year."

The economy grew at a rate of 1.2 percent in the first quarter of this year, about half as fast as it did in the final three months of 2016. Unemployment dipped to 4.3 percent in May, 

"Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined," the Fed statement said. "Household spending has picked up in recent months, and business fixed investment has continued to expand."

Business and Economic News

Avie Schneider

Author

The quarter-point increase in the Federal Reserve's benchmark rate was widely expected. Rates are still near historic lows, but the increase will mean higher borrowing costs for consumers.

Fed raises key interest rate for the fourth time since 2015

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