tiptrot.com
tiptrot.com June 24, 2018


Fed Raises Interest Rates for Second Time this Year

14 June 2018, 07:25 | Cedric Leonard

Fed raises interest rates as unemployment nears record lows | TheHill

Federal Reserve raises interest rates

The Federal Reserve on Wednesday announced that it chose to raise interest rates, and it signalled plans to do so more times than expected this year.

The central bank's new median forecast projects the Fed's benchmark rate at 3.1 percent by the end of 2019, up from 2.9 percent in the previous forecast.

They see another three rate increases next year, a pace unchanged from their projections in March.

Fed policy makers now see US unemployment at 3.6 per cent in the fourth quarter, followed by 3.5 per cent in 2019 and 2020, based on median projections.

The Fed cited the strength of the economy in its statement announcing the rate hike.

After nine years of steady if uneven recovery, the United States is now growing at a pace topping 4 percent, unemployment is as low as it has been this century, and inflation has safely edged up toward an official target. The rate is estimated to fall 3.5% next year, through to 2020, down from the previous forecast of 3.6%.


The Federal Reserve raised a key interest rate another quarter-point on Wednesday.

The Federal Reserve is guiding a USA economy that is as close to ideal as it could have dreamed a decade ago, when the darkest days of the recession forced it to take big risks to protect workers, banks and economies around the world from further devastation. Ten years ago, the Fed cut interest rates to near zero in an effort to boost the economy and stem the deepening financial crisis and recession. Unemployment is 3.8%, the lowest since 2000, and inflation is creeping higher.

Opinion was more divided about 2019's increases, however, although the median outcome was in line with the Fed's own forecasts for three hikes. "Higher rates and higher payments will squeeze the buying power of households without a compensating increase in wages".

Fed officials expect to raise rates two more times this year for a total of four hikes; in March, they expected three rate hikes.

Also notable was that the Fed deleted about 80 words of its statement that said it expected the economy to "evolve in a manner that will warrant further gradual increases" in rates. Inflation by the Fed's preferred gauge would hit its 2 percent target this year and edge up to 2.1 percent over the next two years.

While many economists think the current expansion will exceed the 1990's streak, some worry about what might occur once the impact of the tax cuts begin to fade and the Fed's gradual rate hikes begin to curb growth. When the Fed tightens credit, it aims to do so without derailing the economy. It will become the longest if it lasts past June 2019, at which point it would surpass the expansion that lasted from March 1991 to March 2001. That reflects the fact that the USA recovery after the crisis has been stronger, and inflation is getting closer to the Fed's target. Canada, the European Union and Mexico have all pledged to retaliate with tariffs on USA imports, which some studies show could cost the US close to 200,000 jobs.



Other News

loading...
loading...

Trending Now

Medicare Funding To Run Out 3 Years Earlier
It will decline further to about 2.2 by 2035, when most baby boomers will have retired, officials said. Medicare "is on track to meet its obligations to beneficiaries well into the next decade".

76ers Consider Colangelo’s Dismissal As Twitter Probe Focuses On His Wife
Embiid, the 24-year-old All-Star center , tweeted that he didn't believe the report. "He called me just to deny the story". Someone has to pay the price for this debacle, and it looks like that someone will be Colangelo.

Halep stops Muguruza to reach third French open final
She double-faulted three times in the opening game, part of her 27 unforced errors. She won on her first match point with a backhand victor down the line.

Legal challenge against US, China: ‘Door to trade negotiations with US closed’
President Donald Trump that the new U.S. tariffs on European, Mexican and Canadian goods are illegal and a "mistake". She criticized Trump's decision and pointed out that the tariffs have got nothing to do with national security.

'World is watching' as leaders fly in for historic Singapore summit
The North Korean autocrat's every move will be followed by 3,000 journalists up until he shakes hands with Mr Trump. The meeting marks a sharp turnaround in the status of Mr Kim from worldwide pariah to global player.

Bourdain's mom says he had everything
Reporting on suicides has always been a divisive practice in newsrooms, and some publications had a policy against covering them . Anthony Bourdain , a gifted storyteller and writer who took CNN viewers around the world, died at age 61.

Warriors thump Cavaliers to complete NBA Finals sweep
I'll wake up Friday morning, I'll be locked in on the game plan and what needs to be done to help our team win. Houston probably isn't going away and remember, the Rockets gave the Warriors all they wanted this season.

Opinion analysis: Justices rule for OH in voter-registration dispute
Other states have taken steps to erase duplicate voter registrations without imperiling someone's right to vote. Eligible Ohio voters who have not participated in over two years are targeted by the rule.

Mexico imposes tariffs on $3 billion worth of US exports
President Donald Trump accused Canada of burning down the White House during the War of 1812, according to a new report . What administration officials have insisted is only a "trade dispute" appears closer to becoming a trade war.

Scott majors run intact ... but only just
Today was a bit of a grind but somehow I've snuck through. "I played really nice this morning but it was tougher this afternoon". He's qualified for next week's US Open, a day after finishing in a share of eighth place at the European Tour's Italian Open.