ibusinesslines.com
ibusinesslines.com June 18, 2018


Fed Raises Interest Rates, Signals Faster Hikes on the Way

13 June 2018, 10:29 | Kelvin Horton

Stephen Stanley chief economist at Amherst Pierpont and Bob Browne Northern Trust CIO discuss the

Stephen Stanley chief economist at Amherst Pierpont and Bob Browne Northern Trust CIO discuss the

The Federal Reserve raised a key interest rate another quarter-point on Wednesday. That puts the Fed on track for four rate hikes total in 2018, something the Fed hasn't done since 2006.

The Fed announcement helped resolved a debate in financial markets over whether the Fed under Jerome Powell, who succeeded Janet Yellen as chairman in February, might see a need to signal a possible acceleration in rate hikes. The federal funds target rate, which is now between 1.75 and 2 percent, is the highest it's been in almost a decade, indicating that the nation's central bank has confidence the economy will continue to expand.

Though rates are now roughly positive on an inflation-adjusted basis, the Fed still described its monetary policy as "accommodative", with gradual rate increases likely warranted as a sturdy economy enters a 10th straight year of growth.

Rates for savers have tended to lag the Fed's hikes. The Fed expects inflation higher than 2% over the next two years, according to its latest projections.

Economists and Wall Street strategists are closely following the Fed's policy views.


The decision reflected an economy that's getting even stronger.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. Unemployment, now at an 18-year low of 3.8 percent, would drop to 3.6 percent by year's end and to 3.5 percent in 2019 and 2020 - levels not seen in 49 years.

A gradual rise in inflation is coinciding with newfound economic strength. The Fed is raising rates gradually to keep the economy in check.

Fed says raises interest on excess reserves rate to 1.95 pct from 1.75 pct.

The unemployment rate is 3.8%, the lowest since 2000 and tied for the lowest reading since 1969. All those countries have vowed to retaliate against any US tariffs with their own penalties against USA goods.



Other News

Trending Now

Stores Added in Multi-State Salmonella Outbreak That Includes Illinois
Indianapolis , In . - Precut melon connected to a salmonellosis outbreak may have come from an Indianapolis produce supplier. Each of their products contained at least one melon produced at the company's facility in Indianapolis , Indiana.

Super Eagles land in Russian Federation
They donned white hats with green ribbons to complement the elegant design on their white garments. In the last edition of the FIFA World Cup, Nigeria were knocked out by France in Brazil.

Geraint Thomas wins the Criterium du Dauphine ahead of Adam Yates
Thomas came in second, managing to put further valuable seconds between himself and his rivals for the yellow leader. We're getting closer and closer so I'm happy to get confidence from this race.

North America will host 2026 FIFA World Cup
Morocco planned to use 14 stadiums, nine of which had yet to be built with the other five due for renovation. We will meet somewhere, but I don't know where yet because they refuse to disclose the exact location.

Resident Evil 2 Remake Officially Revealed, Coming January 2019
Players can expect fresh take on the stories of Claire and Leon, as they move around the city in a desperate effort to stay alive. Now, 20 years after the original release of Resident Evil 2 , it's time to return to Raccoon City.

‘Shocking’ die-off of Africa’s oldest baobabs
When a tree is damaged to form a hollow, bark can grow into the cavity and eventually start making new wood to fill in the hole. Scientists are wondering what's behind the mysterious die-off - and are looking at climate change as a likely culprit.

Mark Sanford vs. Katie Arrington
Sanford has also split with own party, perhaps most notably in this coastal district, on human contributions to climate change . She has sought to brand Sanford, who labeled Trump's tariff policies as "an experiment with stupidity", as a NeverTrumper.