Life&Culture

Fed raises rates for second time in 3 months

Fed raises rates for second time in 3 months”

Before the meeting, a Wall Street Journal survey found that 42% of economists expected the Fed to wait until December to start the process and only 25% said it would begin in September.

Low rates have been a tonic for the stock market, because they spur investors to buy shares in hopes of gaining better returns than they'd get from fixed-income assets. Mark O'Byrne, research director at GoldCore in Dublin, told Marketwatch that gold is "vulnerable in the short term after failing to break the $1,300 level, and a retest of $1,220 low seen on May 10th is quite possible".

The central bank's decision comes after lots of signs that the US economy is in good shape.

"We continue to feel that with a strong labor market and with a labor market that's continuing to strengthen, the conditions are in place for inflation to move up", Yellen said. By then, the Fed's forecast would put its key policy rate at 3 percent.

Following a lacklustre first quarter for economic growth and a retreat in headline inflation to 1.5 percent from 1.8 percent earlier in 2017, there is doubt over whether policymakers can stick to their anticipated pace of tightening of three interest rate rises this year and next.

The rate forecast, based on the individual projections for each member, envisions three more rate hikes in 2018 and three more in 2019.

Even the increase that began in late 2016 had little to do with the Fed.

Yellen would not say whether or not she wanted to stay at the Fed for another term.

Traders said the Fed might not be able to hike later this year as forecast given weak inflation data.

That brings me back to the economy as a whole, to American workers, and to one striking possibility: that the Fed's assumed link between low unemployment, rising wages and higher prices could simply be wrong. Coupled with an unchanged dot plot this could be enough for the USA yields and the United States dollars to move higher after the Fed.

Q. Why haven't mortgage rates increased? So, while expectations are for the Fed to raise rates today could this be the last time it raises rates this year? This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and worldwide developments.

We think the market is underestimating a hawkish hike from the Fed. The yield on the 10-year bond was at 2.1310% from 2.2120%. But the highest-yielding CDs have risen from 1.35 percent to 1.5 percent.

The problem is that Trump's economic agenda remains stalled, in part because of resistance in Congress, in part because of a lack of details so far from the administration.

You need to be Logged in to sign up for Express Login.

While the plan itself was seen as dovish, the fact that the Fed wasted no time in laying it out was seen as more aggressive.

Investors will also be listening for any signals Yellen sends about her own future. Federal Reserve (Fed) Chair Yellen's post-FOMC meeting press conference-her second of 2017-starts at 2:30 p.m. ET. The committee includes the seven-member Federal Reserve Board of Governors, which has three vacancies, as well as the president of the Federal Reserve Bank of NY and four Reserve Bank presidents from different regions in the United States.



Like this

Latest




Recommended