Please make 2-3 comments on the topic of discussion below. You may use information from the article appended below, or use other articles on the issue. Please cite the source for any additional article that you use for information. On March 15, the Fed increased its target federal-funds rate by 0.25%. Discuss some pros and cons of the Fed interest rate hike.

Fed Raises Interest Rates for Third Time Since Financial Crisis

By BINYAMIN APPELBAUM MARCH 15, 2017

The Federal Reserve, which raised its benchmark rate on Wednesday for the second time in three months, this time to a range between 0.75 percent and 1 percent, is finally moving toward the end of its nineyearold economic stimulus campaign, which began in the depths of the financial crisis.

But Janet L. Yellen, the Feds chairwoman, said at a news conference after the decision was announced that the Fed did not share the optimism of stock market investors and some business executives that economic growth is gaining speed. It still plans to move slowly because the economy continues to grow slowly. She suggested that the Fed would have plenty of time to adjust its plans should President Trump and Congress cut taxes or spend massively on infrastructure.

Her announcement was full of confidence. But it certainly was not ebullient. The data have not notably strengthened, Ms. Yellen told reporters. We havent changed the outlook. We think were moving on the same course weve been on.

The Fed said that the United States economy continued to chug along, expanding at a moderate pace. Employers are hiring, consumers are spending and businesses the laggards in recent months are starting to plow a little more money into their operations, too.

The Feds sobriety did not appear to make much of an impression on investors. The stock markets heady march that began after Mr. Trumps election continued apace.

The Standard & Poors 500stock index rose 0.84 percent to close at 2,385.26 Wednesday, moving up sharply after the announcement. Some said the Fed was still a long way from doing anything that might hurt.

The first four to eight rate hikes are the lowhanging fruit, said Deron McCoy, the chief investment officer at SEIA, a Los Angeles firm. The real test will be whether the economy can withstand positive real rates. And that still seems to be a 2019 topic.

Some analysts said the Fed will want to see an impact from its actions. Policy makers hike rates to tighten financial conditions, said Ellen Zentner, the chief United States economist at Morgan Stanley. If this easing of financial conditions on the back of todays hike are sustained, that would tell policy makers they need to do more.

Ms. Zentner said she expected the Fed to raise rates again at its June meeting. The Feds policymaking committee next meets on May 2 and 3.

She noted that the Feds longerterm outlook is less clear. Ms. Yellens term as Fed chairwoman ends in February, and Mr. Trump could then replace her.

The Fed, charged with maximizing employment and moderating inflation, is close to achieving both goals. The unemployment rate fell to 4.7 percent in February, consistent with the normal churn of people moving among jobs. And after several years of concern that prices were not rising fast enough, inflation is reviving. The Feds preferred measure rose 1.9 percent over the 12 months ending in January, close to its 2 percent annual target.

The basis for todays decision is simply our assessment of the progress of the economy, Ms. Yellen said at the postmeeting news conference. And its been doing nicely.

The Fed, which had made more inflation a central objective, said on Wednesday that it was now focused on stabilizing inflation. Ms. Yellen took the opportunity to note that inflation may now rise a bit above 2 percent, just as it has been below 2 percent the last few years. Its a reminder 2 percent is not a ceiling on inflation, she said. Its a target.

The Feds increased confidence was reflected in a new round of policy forecasts it also published Wednesday. An increased number of Fed officials are expecting to raise rates at least twice more this year. Only three of the 17 officials who submitted forecasts expect the central bank to move more slowly. There was a similar coalescing around tighter policy for the following two years, marking the first time in recent years that the Feds quarterly economic forecasts have shifted toward a prediction of tighter monetary policy.

This is the third time the Fed has raised rates since the financial crisis. The first hike came at the end of 2015 and the second almost exactly one year later. This time the Fed waited just three months. The benchmark rate remains below 1 percent, a very low level.

People with credit card debt are likely to see an immediate increase of about a quarter percentage point in their interest rates. The effect on longerterm loans is less direct, but the average rate on a 30year mortgage rose by half a percentage point over the last year.

The nations largest borrower, the federal government, will also feel the pinch of higher rates. The Congressional Budget Office expects federal interest payments, measured as a share of the economy, to double over the next decade.

Savers are unlikely to benefit immediately. Banks tend to raise interest rates on loans more quickly than they raise rates on deposits. Last week, the average rate on a sixmonth certificate of deposit was 0.14 percent. Last year at this time: 0.13 percent.

The Feds move to raise rates puts it on course for a slowmotion collision with President Trump, who has repeatedly promised to increase economic growth through policies including cuts in taxation and regulation and more spending on infrastructure and defense.

Fed officials have emphasized that the economy is already growing at roughly its maximum sustainable pace faster growth would therefore lead to faster increases in interest rates.

Some economists and liberal activists argue that the Fed is raising rates too quickly. Narayana Kocherlakota, an economist at the University of Rochester and a former member of the Feds policymaking committee, noted that strong economic growth continued to pull people into the job market while wage growth remained relatively weak. That suggests, he said, that the economy has not yet returned to full employment.

We should be seeing faster wage growth with this level of employment growth if we were close to full employment, Mr. Kocherlakota said on Twitter before the Feds decision.

Mr. Kocherlakotas successor as president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, cast the sole vote against raising rates on Wednesday.

The Feds assessment of economic conditions remained quite measured. The economy expanded by just 1.6 percent in 2016, and there is little sign of an acceleration during the first quarter. Fed officials continue to forecast a Goldilocks economy, with the unemployment rate remaining at 4.5 percent and inflation around 2 percent for the next three years.

Ms. Yellen played down surveys showing a sharp rise in the optimism of consumers and business executives since the presidential election, noting there is little evidence that such surveys predict spending decisions.

She said that Fed officials spoke regularly to business leaders, and that many were undoubtedly in a much more optimistic frame of mind. But she added that many of those executives have adopted a waitandsee attitude just like the Fed itself.