Fed raises key rate and sees possible acceleration in hikes

The Federal Reserve is raising its benchmark interest rate for the second time this year.

The Federal Reserve is raising its benchmark interest rate for the second time this year and signaling that it may step up its pace of rate increases because of solid economic growth and rising inflation.

The Fed now foresees four rate hikes this year, up from the three it had previously forecast.

The central bank is raising its key short-term rate by a modest quarter-point to a still-low range of 1.75 percent to 2 percent. The move reflects the economy's resilience, the job market's strength and inflation that's finally nearing the Fed's target level.

The action means consumers and businesses will face higher loan rates over time.

It was the Fed's seventh rate increase since it began tightening credit in 2015, and it followed an increase in March this year.