Federal Reserve Raises Key Interest Rate and Signals More Increases May Come

14 June, 2018, 05:41 | Author: Eric Barnett
  • Federal Reserve chairman Jerome Powell

Wednesday's decision - the sixth quarter-point increase in 18 months, raising the benchmark federal funds target rate to a range of 1.75 per cent to 2 per cent - was a unanimous 8-0. Total rate hikes projected for 2018 is up to four from three previously. The Fed previously nudged rates up in March.

The latest increase will bring the benchmark federal-funds rate to a range between 1.75% and 2%.

"Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly", the Fed wrote in its statement on Wednesday announcing the interest rate hike.

US Treasury yields rose after the release of the statement while US stocks were trading marginally lower.

In the currency market, the dollar was relatively well bid ahead of the Fed's meeting.

Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Market Committee meetings in Washington, U.S., March 21, 2018. While the national economy appears to be on solid ground for 2018, the Fed must now consider how growing worldwide trade disputes could slow US growth.

It's the second rate hike under Powell, a Republican appointed to lead the Fed by President TrumpDonald John TrumpWhat you need to know about Tuesday's elections Danny Tarkanian wins Nevada GOP congressional primary Laxalt, Sisolak to face off in Nevada governor's race MORE.


Mr Powell called the figures "encouraging" but said the bank wants to see the economy sustain that rate of inflation before it declares victory. The Fed anticipates that inflation will be 2.1% in 2019 and 2020, which is a little over its target rate of 2% through 2020, but is viewed as manageable.

Projections released after the Fed's two-day meeting in Washington show policymakers expect the USA economy will grow 2.8% this year, while unemployment falls to 3.6%.

The Fed's twin mandate is to bolster employment while controlling inflation, and in the current environment more rate rises appear inevitable.

Some emerging market currencies stayed under pressure on worries higher US rates could prompt fund outflows from emerging markets to the United States. Ahead of the announcement, markets were pricing in a almost 100% chance of a rate hike. Rates for vehicle loans and variable-rate mortgages are also likely to increase.

However, higher rates would help savers earn more interest on their deposits.

Trump has slapped tariffs on steel and aluminum imports, has threatened additional tariffs on Chinese imports and has directed his administration to consider further duties on imported cars.

Recommended:

  • Severe thunderstorm watch upgraded to warning for York Region

    Severe thunderstorm watch upgraded to warning for York Region

    Scattered thunderstorms are expected to develop throughout the afternoon as a cold front moves through the region. The greatest threats from these storms will be heavy rain, gusty wind over 50 miles per hour and large hail.
    Don't have sex with foreign men’

    Don't have sex with foreign men’

    Unsurprisingly this lawmaker has made similarly prudish comments before, once criticizing the crop top of a local journalist. Pletneva previously criticised the #MeToo campaign against sexual harassment, tentatively spreading in Russian Federation .
    Love Island's Niall Aslam QUITS the show

    Love Island's Niall Aslam QUITS the show

    Fans were divided over the 27-year-old's swipe, with one replying: "To be fair they only been coupled up a few days. He later found a spark with Georgia after she entered the villa alongside fellow new addition Rosie Williams , 26.
  • North America to Hold the 2026 FIFA World Cup

    North America to Hold the 2026 FIFA World Cup

    Launched on June 1, 2016, Daily Hive is the evolution of Vancity Buzz and is now in Vancouver, Calgary, Toronto, and Montreal. There is also no National Football League stadium within Portland that could be used.
    Raccoon scales Minnesota office tower, leaving public in suspense

    Raccoon scales Minnesota office tower, leaving public in suspense

    Paul was safely trapped early Wednesday, and animal control officials were preparing to release it back into the wild. This little guy had legions of social media users anxious for his safety after scaling the UBS Tower in St.

    More Details From George Lucas' Star Wars Sequel Trilogy Revealed

    For those who don't know, the idea of the Whills is something George Lucas had always meant to be a larger part of Star Wars . One user, who said he had a YouTube channel and faced harassment, told Boyega to "stop crying and playing the victim".
  • Michael Reagan: Peter Navarro Should Apologize to Justin Trudeau

    Michael Reagan: Peter Navarro Should Apologize to Justin Trudeau

    Trump and then tries to stab him in the back on the way out the door", Navarro said in an interview with Fox News on Sunday. Trump is right to assail China for unfair trade, but doing the same with our closest allies is a mistake.
    US, Mexico, Canada embark on World Cup history with winning bid

    US, Mexico, Canada embark on World Cup history with winning bid

    The United States is likely to have 10 cities selected to host games, while Mexico and Canada are expected to each have three. Hasseltine said. "We want to make sure the legacy lives forever and lives long beyond the games' being here".
    Federal Reserve raises interest rates

    Federal Reserve raises interest rates

    It would allow the Fed to be less choreographed and more flexible in cutting or raising rates as economic conditions warrant. All those countries have vowed to retaliate against any USA tariffs with their own penalties against US goods.
  • Trump meets Singapore PM ahead of Kim summit

    Trump meets Singapore PM ahead of Kim summit

    It formally referred to Trump by his full name in the Monday report, including his middle initial-the first time it has done so. A group of North Korean security staff were seen coming back into the hotel with cardboard boxes, one with McDonald's takeaway.
    USA  to offer ‘unique’ guarantees to North Korea

    USA to offer ‘unique’ guarantees to North Korea

    Putin's optimistic words, some Russian foreign policy analysts warn that the summit is likely to end in failure. Body language expert said they both tried to project command as they met, but also displayed signs of nerves.
    Cyberpunk 2077 Will Let You Pick Protagonist Gender

    Cyberpunk 2077 Will Let You Pick Protagonist Gender

    CD Projekt RED fans have been waiting years for the reveal of this role playing game, and it was not a disappointment. This is a dark game intended for a mature audience and as it turns out, Night City is a pretty grim place to live.


Popular

Farrah Abraham Yelled 'Go F*** Yourself' to Cops Before Bev Hills Arrest
The guard said she hit him in the face with her forearm, grabbed his ear and pushed him in the face. Literally, she has trouble leaving with the insane crowd waiting outside.

Trump fires back at Robert De Niro's vulgar comments about him
This may be a very minute and honest mistake, but since this was Trump, twitterati were unforgiving. "I met him, we shook hands". President Trump has fired back at actor Robert De Niro for the vulgar comments he made towards him.

Trump habit of ripping up docs headache for record-keepers
The policy requires that all memos, letters, documents, and papers touched by the president be kept as historical records in the National Archives.

Dennis Rodman to Travel to Singapore for North Korea Summit
US allies are anxious that Trump could upend decades of worldwide precedent, NPR's Mara Liasson reported on Weekend Edition Sunday .

Microsoft is redesigning Office to simplify the user experience
The update also includes icons that scale better with screen size and a more prominent Search feature in the Office applications. For everyone else, Microsoft is moving forward cautiously, especially when it comes to Word, Excel, and PowerPoint for Windows.

Spain Head Coach Julen Lopetegui Sacked
France Football: A surprise for everyone, Julen Lopetegui has been sacked as the manager of Spain two days before Spain start the World Cup .

The surprising thing Uber will soon know about you
A photographer (R) takes pictures of the logo for ride-hailing service Uber during a press conference in Taipei on April 13, 2017. At least that's according to a patent application spotted by CNN with the title "predicting user state using machine learning".

Rose McGowan's trial date set for cocaine charge
When the narcotics accusations against McGowan surfaced, she said it was an attempt to silence her and was a "load of horsesh*t". The actress and activist has been charged with felony cocaine possession over an incident that occurred in January 2017.

NCAA changes redshirt rule in college football
The NCAA has passed a rule that allows college football players to play up to four games without burning their redshirt. The so-called autonomy conferences will consider two different proposals to allow schools to cancel the aid.

FG declares holidays to mark Id-el Fitr
The festival falls from the 21st of August to the 25th, and celebrates the end of the annual pilgrimage to Mecca. They also offer more prayers, contribute more money to the poor and regularly study the Qu'ran.