Don't miss

Replay


LATEST SHOWS

EYE ON AFRICA

Global Competitiveness report releases 2018 Africa performance

Read more

MEDIAWATCH

Brexit: 'The end isn't nigh'

Read more

THE DEBATE

Where do you draw the line? Brexit deadline summit stumbles over Irish border

Read more

ACCESS ASIA

Uighurs and Kazakhs held in re-education camps in China

Read more

MIDDLE EAST MATTERS

Salim Saab: Showcasing the women of the Arab art world

Read more

FOCUS

Irish border remains stumbling block in Brexit talks

Read more

ENCORE!

Film show: Capernaum - powerful social drama or poverty porn?

Read more

IN THE PRESS

Nature under threat: Arresting pictures from Wildlife Photography Awards

Read more

PERSPECTIVE

Protecting heritage land against mining companies

Read more

Business

US raises interest rates 0.25 percent amid growing confidence

© AFP archive

Text by NEWS WIRES

Latest update : 2017-03-15

The U.S. Federal Reserve raised interest rates on Wednesday for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank’s target.

The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 percent marked one of the Fed’s most convincing steps yet in the effort to return monetary policy to a more normal footing.

However, the Fed’s policy-setting committee did not flag any plan to accelerate the pace of monetary tightening. Although inflation is “close” to the Fed’s 2 percent target, it noted that goal was “symmetric,” indicating a possible willingness to allow prices to rise at a slightly faster pace.

Further rate increases would only be “gradual,” the Fed said in its policy statement, with officials sticking to their outlook for two more rate hikes this year and three more in 2018. The Fed lifted rates once in 2016.

Business investment “appears to have firmed somewhat,” the Fed said in language that reflected a stronger sense of the economy’s momentum.

Fresh economic forecasts released with the statement showed little change from those of the December policy meeting and gave little indication the Fed has a clear view of how Trump administration policies may impact the economy in 2017 and beyond.

“With gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace,” the Fed said, maintaining language it has used in previous statements.

The Fed’s projections showed the economy growing by 2.1 percent in 2017, unchanged from the December forecast. The median estimate of the long-run interest rate, where monetary policy would be judged as having a neutral effect on the economy, held steady at 3.0 percent.

The unemployment rate Fed officials expect by the end of the year was unchanged at 4.5 percent, while core inflation was seen as slightly higher at 1.9 percent versus the previous 1.8 percent forecast.

Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. (1830 GMT) to discuss the policy statement.

The rate increase comes amid a broad improvement in the world economic outlook and a sense among Fed policymakers that the U.S. economy is close to the central bank’s employment and inflation goals.

According to the policy statement, risks remained “roughly balanced,” the Fed said.
Minneapolis Fed President Neel Kashkari was the only Fed official to dissent in Wednesday’s decision, saying he preferred to leave rates unchanged.

(REUTERS)

Date created : 2017-03-15

  • USA

    Federal Reserve raises US interest rates by 0.25% in first hike since 2006

    Read more

  • USA

    US Federal Reserve keeps interest rates unchanged

    Read more

  • UNITED STATES

    Rising income inequality could harm USA, says Fed chief

    Read more

COMMENT(S)