Federal Reserve Signals First Rate Increase in Three Years as Inflation Stays Sticky

Central bank faces a tight inflation backdrop

WASHINGTON — The Federal Reserve is widely expected to raise its short-term interest rate this week, ending a long pause as consumer prices remain above the central bank’s 2 percent goal. Futures markets priced in a quarter-point move after a run of firmer-than-expected inflation readings.

What households and businesses may feel

A higher federal funds rate typically feeds through to credit cards, auto loans, and some small-business lines. Mortgage rates already moved in anticipation of the decision. Employers said they are watching labor costs and consumer demand before adding staff for the holiday quarter.

Officials have said they will look at incoming data meeting by meeting. Investors will parse the policy statement and any updated economic projections for clues about whether this is a one-time adjustment or the start of a longer tightening cycle.