Monday, 18 June, 2018

Federal Reserve raises interest rates

Federal Reserve raises interest rates Fed raises interest rates as unemployment nears record lows | TheHill
Preston Stone | 13 June, 2018, 23:27

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

Federal Reserve Chairman Jerome Powell spoke, March 21, following the Federal Open Market Committee meeting in Washington.

The Fed now sees gross domestic product growing 2.8 percent this year, slightly higher than previously forecast, and dipping to 2.4 percent next year, unchanged from policymakers' March projections.

Besides raising its projection for rate increases this year from three to four, the Fed removed a key sentence from the previous statement that had been viewed as foreseeing a need to keep rates low for an extended period. In the United Kingdom, the Bank has stopped actively buying financial assets and interest rates are up a little from their lows. That reflects the fact that the U.S. recovery after the crisis has been stronger, and inflation is getting closer to the Fed's target.

"The bond market has the belief that, as the Fed continues to tighten, it's going to lead to a slowing of the economy", said Peter Boockvar, chief investment officer of Bleakley Financial Group. Economic activity is projected to expand 2.4% in 2019, unchanged from the previous forecast; finally, the economy is expected to grow 2.0% in 2020, unchanged from the previous forecast. The step was needed, the Fed said, to be sure rates stay within the intended boundaries. Unemployment is 3.8%, the lowest since 2000, and inflation is creeping higher.

Griezmann is staying in Spain, that much is clear - Deschamps
Lemar played down a move ahead of setting off for the World Cup saying: "There's no news". However, those figures will revert to the previous numbers after July 1.

Consumers can expect interest rates to rise for all types of debt.

With employers hiring at a solid pace month after month, unemployment has reached 3.8 percent. It then raised rates once in 2015, once in 2016, three times in 2017 and now twice this year.

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.

While many economists worry about a trade war harming growth, the Fed did not mention trade concerns in its statement. The U.S. central bank is also more optimistic on economic growth and further strength in the labor market.

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