US Fed Raises Key Interest Rate

US Fed Raises Key Interest Rate”

The U.S. Federal Reserve Board has raised interest rates for the first time in six months.

It is the fifth time the Fed has raised rates since cutting rates to nearly zero following the 2008 financial crisis. The U.S. economy is performing well.

"The labor market has continued to strengthen and. economic activity has been rising at a solid rate", the Federal Open Market Committee said in a statement following its two-day meeting.

Tannenbaum believes Yellen should get credit for how she has helped maintain economic growth.

China observers earlier this year had estimated a significant slowdown in growth after aggressive moves to reduce excessive borrowing and restrict home speculations. That's what the Fed considers healthy for the economy. Unemployment is expected to fall even further to below 4 percent in 2018.

If the BOK raises its benchmark rate belatedly on concerns about household debts, South Korea's benchmark rate could be lower than the Fed's policy rate.

The rate hike is Yellen's final major act as Fed chair as she will be replaced by Jerome Powell in February. I think her leadership style from what I witnessed was excellent.

"Chair Yellen is leaving on a high note", said Swonk in a research note. "While changes in tax policy will likely provide some lift to economy policy in the coming year", she said, "the macroeconomic effects remain uncertain".

The major USA stock indexes closed mixed on Wednesday after the release of the Fed's interest rate and monetary policy decisions.

The ratio of disposable income to household debts stood at 155.5 percent as of end-September, up 2.1 percentage points from the end of a year ago. "There's work undone there".

Yellen will then address reporters after the 2 p.m. announcement on rates.

The Fed is expected to hike a key short-term interest rate, which would be the fifth rate increase of Yellen's tenure. Sticking with its previous forecast, the Fed also said it still expects to raise rates three more times in 2018. The central bank revised its growth forecast for 2018 to 2.5% in 2018, up from the 2.1% forecast in September. Economists say they expect the world's second-largest economy to feel more pains of soaring funding costs in 2018.

"Thus for 2018, based on a macro backdrop of continuation in the global growth story, subdued inflation and gradual monetary policy convergence, outright yield levels can be expected to adjust higher". "But the overall reaction in the market isn't that profound".

"The adjustment of China's money-market-rate increase will continue to remind investors that financial deleveraging is a long-haul project for China", said Mr. Xie. This is a move toward credit tightening in tandem with raising interest rates.

The digital currency was trading at $16,314 yesterday, down from its peak near $19,000. She warned Americans to be careful before buying the asset, which can have wild price swings.

Fed Chair Janet Yellen stressed that stagnating prices in the United States were caused by "temporary factors", including the lowering of mobile phone service fees.

In the end, while many have now shifted to thinking the Fed is going to hike four - or more - times next year, we think that is overstating the symmetric nature of potential risks to today's run of very good news. And she lamented that the number of women and minority-group members pursuing the field of economics is "disproportionately and disturbingly low".

"I still see the financial stability risks from it as limited", Yellen said.

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