Fed Raises Key Interest Rate For 4th Time Since 2015

Judith Bessette
Junho 22, 2017

Fed officials now expect the US unemployment rate to end the year at 4.3 percent, down from the 4.5 percent they predicted in March. The BoE might underestimate the recent spike in prices, but if two or three MPC members see a need to follow the Fed by hiking rates the pound will appreciate sharply. These were mostly purchased in 2007-2009 financial crisis and recession.

Now the Fed said the inflation will be below its 2 percent target.

Estimates for the unemployment rate by the end of this year moved down to 4.3 percent, the current level, and to 4.2 percent in 2018, indicating the Fed believes the labor market will continue to tighten.

In morning inter-bank trading, the shekel-dollar exchange rate was down 0.25% at NIS 3.5203/$ and down 0.32% against the euro at NIS 3.924/€.

"The committee now expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated". Fed leaders suggested they still expect to raise rates again later in the year.

Frick says the Fed also may be trying to cool off financial markets, particularly the bond market. "But it is unlikely that the bank will raise the rate this year".

For agency debt (MINT) and mortgage-backed securities (MBB), this cap would be $4 billion per month, rising by $4 billion every quarter until a cap of $20 billion per month is reached.

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Last week the Senate voted 98-2 to pass new Iran sanctions targeting 1st, Iran's ballistic missile program and 2nd, the IRGC [a]. The ministry said strikes in neighboring Iraq , where the USA -led coalition campaign is also operating, would continue.

Meanwhile, in view of stable economic conditions, the Fed plans to reduce its 4.5-trillion-U.S. -dollar balance sheet later this year and unveiled a detailed plan to trim its bond holdings.

Federal Reserve Board Chairwoman Janet Yellen arrives at a news conference following a meeting of the Federal Open Market Committee June 14, 2017 in Washington, DC. "When taking into account the fundamentals and recent economic indicators, a massive capital flight won't be taking place", she said.

However, Yellen said business and household confidence remain quite strong, and echoed the statement from the Fed's policysetting Federal Open Market Committee, which repeated its confidence that the USA economy would continue to expand "at a moderate pace" even with further gradual rate increases.

Find out how soon the Fed's rate hike will affect you. The FTSE 100 of Britain dropped 1.1 percent to 7,393.

In her press conference after the announcement, Fed Chair Janet Yellen asserted that USA economic growth appears to have rebounded enough to justify both higher rates and a return of Fed-held assets to the wider market.

But the Fed's forecasts are only predictions and are frequently revised as its assessments evolve. "Hence there is another rate hike on the table for this year", said Naeem Aslam, chief market analyst at ThinkMarkets UK, in a note.

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