Federal Reserve announces second rate hike this year, despite slower inflation

Federal Reserve officials voted Wednesday to raise their interest rate target for the second time in 2017 and to begin shrinking the central bank’s balance sheet this year, a vote of confidence in the prospects for the U.S. economy in the months ahead despite weak first-quarter growth and slowing inflation.

The rate increase brings the Fed’s target for short-term interest rates to a range of 1 percent to 1.25 percent, back to its level during the financial crisis in 2008, before the Ben Bernanke-led Fed lowered rates all the way to zero.