Fed Raises Rates, Maintains Forecast for One More in 2017

The Federal Reserve raised its benchmark rate by a quarter percentage point, forecasting one more increase this year and several next year. Inflation is slightly below target but expected to stabilize. The Fed plans to reduce its balance sheet gradually, with specific caps on Treasurys and mortgage securities. The Fed funds rate remains the primary tool for monetary policy, but reinvestments may be adjusted if economic conditions worsen.

What is the expected median Fed funds rate target by the end of 2018?

• 1.5%

• 3.0%

• 2.1%

• 2.5%

How does the Federal Reserve plan to reduce its balance sheet?

• By gradually tapering reinvestments in securities

• By selling off all securities immediately

• By stopping all monetary policy activities

• By increasing interest rates

What is the initial monthly cap for reducing Treasury securities?

• 4 billion

• 6 billion

• 10 billion

• 20 billion

What is the primary tool for the Federal Reserve's monetary policy?

• Quantitative easing

• Balance sheet adjustments

• Inflation targeting

• Fed funds rate

Under what condition might the Fed reintroduce quantitative easing?

• If the Fed funds rate reaches zero again

• If the economy shows significant improvement

• If unemployment rates drop significantly

• If inflation exceeds 3%