Fed hikes rate for second time this year

Share
Fed hikes rate for second time this year

Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, is scheduled to deliver his comments on the monetary policy in a press conference at 18:30 GMT. The Fed has signaled that it will continue to gradually increase rates in response to higher inflation and strength in the US labor market. The action means consumers and businesses will face higher loan rates over time.

It is the seventh time the bank has raised rates since 2015.

The biggest change the Fed made Wednesday was to signal that it intends to do two more rate hikes this year, instead of just one. The statement the Fed issued today after its latest policy meeting ended suggested that he does. Officials penciled in a total of four rate increases for this year, up from a projection of three increases at their March meeting. It also forecast an even lower unemployment rate of 3.5% for 2019 and 2020. That means that by then, it thinks its key rate will finally exceed the 2.9 percent it sees as neutral - as neither stimulating nor restraining growth.

U.S. unemployment dropped to 3.8% in May, its lowest level since April 2000 and one of the lowest levels since the second world war. Inflation by the Fed's preferred gauge would hit its target of 2 percent this year and edge up to 2.1 percent over the next two years. Consumer and business spending is powering the economy, in part a result of the tax cut President Donald Trump pushed through Congress late past year.

The unemployment rate is 3.8%, the lowest since 2000 and tied for the lowest reading since 1969.

The Fed's twin mandate is to bolster employment while controlling inflation, and in the current environment more rate rises appear inevitable. But if it miscalculates and overdoes the credit tightening, it can trigger a recession. Long is an economics correspondent.

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

Interest rates are going up again as the economy gets hotter. All those countries have vowed to retaliate against any US tariffs with their own penalties against USA goods.

While many economists worry about a trade war harming growth, the Fed did not mention trade concerns in its statement.

Fed vote in favor of policy was unanimous.

In a technical move, the central bank also chose to set the interest rate it pays banks on excess reserves - its chief tool for moderating short-term interest rates - at just below the upper level of its target range.

Share

Advertisement

Related Posts

Toyota makes record $1 billion investment in ride-hailing firm Grab
It also has Southeast Asia's biggest land transportation fleet, delivering over six million rides per day. The US$1 billion sum is the largest-ever investment globally by an automaker in the ride-hailing sector.

Canada parliament slams US' Trudeau attack
Kudlow later suffered a "very mild" heart attack, the White House said Monday, but was in good condition. Senior officials of the Trump administration piled on the smears.

Trump ‘can’t jump ahead’ in North Korea negotiations: Leon Panetta
Under the circumstances we are negotiating a complete deal", Trump said , adding "It is inappropriate to have war games. All of the concessions KCNA claims Trump made are also things China has said publicly it wants.

How Did a Tick Temporarily Paralyze a Little Girl?
While combing her daughter Kailin's hair , she noticed a tick on her scalp, Griffin told Mississippi News Now . Fun and laughter aside, Jessica wants her readers to be aware that tick paralysis is both real and risky .

‘Dumbo’ First Trailer: Tim Burton Brings Disney’s Lovable Elephant to Dazzling Life
It's time to address the elephant in the room: This new trailer for Tim Burton's remake of Dumbo . The new trailer includes shots of the circus and even a fleeting glimpse of Dumbo in flight.

SNP MPs stage mass walkout during PMQs over Brexit
The House of Commons descended into chaos as the SNP Westminster leader Ian Blackford was expelled for trying to call a stunt vote in the middle of PMQs.

You can get a free taco at Taco Bell on Wednesday
This is all thanks to the Golden State Warriors for stealing a road game in the National Basketball Association finals. Taco Bell will give away one free Doritos Locos Taco to every customer at every location across the country.

Africa’s Oldest Baobab Trees Are Dying Suddenly
The baobab is the biggest and longest-living flowering tree‚ and has branches resembling roots reaching for the sky. In recent years, a mysterious fungal disease has been hitting baobabs trees in certain parts of the continent .

Awaiting sentencing, Fyre Festival promoter arrested again
Ticket-buyers reportedly then didn't either receive the tickets they paid for or didn't receive the tickets that were advertised. Back in March , Billy McFarland pled guilty to two counts of federal wire fraud in connection to the Fyre Festival scandal.

Opportunity rover sends transmission amid Martian dust storm
On Mars, dust storms can crop up suddenly, NASA said in a statement , but it could take weeks or even months for them to subside. NASA's instrumentation shows that the rover's current temperature is around -29 degrees Celsius (-20 degrees Fahrenheit).

© 2015 ExpressNewsline. All Rights reserved.