Monday, 22 October, 2018

US Federal Reserve raises interest rates

Credit AP  JACQUELYN MARTIN				“The economy is doing very well. Most people who want to find jobs are finding them,” Fed chief Jerome Powell said Wednesday Credit AP JACQUELYN MARTIN “The economy is doing very well. Most people who want to find jobs are finding them,” Fed chief Jerome Powell said Wednesday
Priscilla Morrison | 13 June, 2018, 22:24

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

The Federal Reserve raised short-term interest rates for the second time this year on Wednesday.

The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the USA central bank's shift from policies used to battle the 2007-2009 financial crisis and recession.

Even so, raising rates too quickly could prevent vulnerable Americans and pockets of the country still struggling from reaping the benefits of a strong economy. Unemployment is 3.8%, the lowest since 2000, and inflation is creeping higher.

Fed says setting ioer rate 5 basis points below top of target range for funds rate aims to keep market rates well within range.

More news: US Extradites Ex-President Martinelli to Face Charges in Panama - State Dept.

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

Announcing the decision to increase its target for the fed-funds rate to a range of 1.75% to 2%, the Fed described the USA jobs market as "strong" and said economic activity had been rising at "a solid rate". Officials also said that "indicators of longer-term inflation expectations are little changed".

So-called core inflation - which excludes volatile items like energy and housing - is now 2.2 percent, around the level the Fed is looking for. The labor department reported Tuesday, just as the Fed was meeting, that the consumer price index had risen by 2.8% from a year earlier, the biggest annual gain since February 2012. The Fed expects inflation higher than 2% over the next two years, according to its latest projections.

Growth is also expected to stay close to nearly 3 percent of GDP through the year, and Fed officials are eager to prevent the economy from overheating. They signaled previously that they wouldn't overreact if inflation overshot the target, but they haven't said how much of an overshoot they will tolerate, or for how long. Not since 1969 has the jobless rate been lower.

The Fed now foresees four rate hikes this year, up from the three it had previously forecast. For 2020, the Fed foresees a median rate of 3.4 percent.

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