After completing its second meeting of 2017, the Federal Reserve announced it had decided to increase the federal funds rate for the second time in three months, according to an official statement.
The Fed's long-discussed goal is to encourage inflation to reach 2%. The statement released after the March 14-15 meeting pointed out that this objective is within reach, though the country remains just shy of it.
The federal funds rate is now at a range of 0.75% to 1%, though several central bank officials have spoken up with predictions of multiple increases yet to come before the year ends.
Boston Federal Reserve President Eric Rosengren said in a speech that he's in favor of one increase for every two FOMC meetings. That amounts to four rate hikes total (including March's rise), all an increase of one-quarter point, CNBC reported.
"Several Fed members have spoken up with predictions of multiple increases yet to come."
Rosengren argues that this approach is necessary to keep wages steady. A labor shortage amid a growing economy could push wages up and may, in turn, "overheat" the economy, as he put it.
"If the economy runs too hot, it could ultimately require a less gradual monetary policy adjustment – which could potentially place at risk the significant progress the economy and labor market have made since the Great Recession," Rosengren said, according to CNBC.
San Francisco Fed President John Williams echoed Rosengren's sentiments, CBNC reported.
"What a difference four years makes," Williams said in a statement addressing the Forecasters Club in New York. "We're now very close to reaching the Fed's dual mandate goals of maximum employment and price stability. In fact, if you do the math, we are about as close to these goals as we've ever been."
Williams, a non-voting member who contributes to policy discussions, noted that investors shouldn't rule out at least three more hikes this year.
Chicago Fed President Charles Evans also indicated his support for another couple potential increases - though he was cautious of indicating he would vote for three.
"To the extent that I gain more confidence in the forecast that I have, that would be a good indicator that I could perhaps support three," he told Bloomberg TV. "Two might be the right number if there's a little bit more uncertainty."
Nine of the 10 voting members supported the March increase, according to the Fed's statement. The one member who didn't was Minneapolis Fed President Neel Kashkari. Kashkari also voted against increasing it during the first meeting of the year, ending on Feb. 1, though he was in good company then; the final decision was to keep it at between 0.5 and 0.75 for another month.
Kashkari, who is new to the FOMC vote this year, took to Medium following the Feb. 1 meeting to elaborate on his individual position. He wrote that, though inflation is moving in the right direction, it's not doing so very rapidly. Additionally, he noted that while employment numbers look positive, there still seem to be challenges in many corners of the country.
"We also know that the aggregate national averages don't highlight the serious challenges individual communities are experiencing," he wrote. "For example, today while the headline unemployment rate for all Americans is 4.8%, it is 7.7% for African Americans and 5.9% for Hispanics."
About a month after Kashkari published his essay, the Bureau of Labor Statistics reported that 235,000 jobs were added in February and unemployment came in at 4.7% for the nation. However, black and Hispanic Americans showed unemployment rates of 8.1% and 5.6%, respectively.
Kashkari refrains from making any predictions. He says attempting to estimate what will happen in future meetings can take a negative turn in the event that economic indicators don't pan out as expected, forcing Fed members to reverse their previous stances.
On that point, Kashkari is correct; There is no way to predict what future interest rates will be or which particular economic indicators will influence them. For now, though, consumers can expect that rates will begin to tick upward. Those looking to make a home purchase this spring may benefit from locking in a low rate sooner rather than risking a higher quote later.