The Federal Reserve raised interest rates on Wednesday for the second time in three months, citing continued U.S. economic growth and job market strength, and announced it would begin cutting its holdings of bonds and other securities this year.
In view of the stable economic conditions, the Fed plans to reduce its 4.5-trillion-U.S.dollar balance sheet later this year and unveiled detailed plan to trim its bond holdings.
The message the Fed sent on Wednesday was upbeat: It believes the USA economy is on firm footing as it enters its ninth year of recovery from the Great Recession.
The central bank is also still on track to raise rates one more time this year, according to the FOMC's projections which have remained unchanged since its March meeting, despite the market expecting today's decision to be the last hike of 2017.
With the jobless rate cut from 10 percent to just 4.3 percent recently, the recovering economy no longer needs so much help from low interest rates. In addition, the rate of inflation is one of two primary variables the Fed weighs when making monetary policy decisions, the other being unemployment. In term of the federal funds rate, the FOMC median figures are consistent with three additional rate hikes in both 2018 and 2019. The reductions would begin this year "provided that the economy evolves broadly" as Fed officials are forecasting, she said.
Xbox One X Vs Nintendo Switch Vs PlayStation 4 Pro
Microsoft has come under fire from some critics who worry the company's new Xbox One X is overpriced. Microsoft and Sony both introduced their previous generation consoles in late 2013.
Since rates began rising again, Amis has been advising retirees and others with fixed-income investments like bonds to ensure that their portfolios are balanced between very short-term and long-term bonds.
Citing recent inflation declines, greater household spending, and a steady job market, the Fed voted almost unanimously to increase the interest rate; as in March, when rates rose from 0.75% to 1.0%, Minneapolis Fed president Neel Kashkari was the lone holdout.
In a sign of confidence, the Fed upgraded its forecast for USA economic growth and unemployment this year. The plan calls for gradually reducing these holdings in ways that do not disrupt markets. If it does hike another time or two without higher inflation or stronger economic growth to support it, investors could "become unnerved", he says.
The post-meeting reaction shows how the Fed's determination to boost rates may be winning over bond traders who had doubted the central bank's resolve. However, should inflation continue missing, we would expect the Fed to pare back its rhetoric and likely further lower its projections for the natural rate of unemployment. Hawks tend to worry that rates kept too low for too long could escalate inflation or fuel asset bubbles. "Most major advanced economies have been suffering from low inflation since the global financial crisis", wrote Kashkari in an explanation of his dissent from the March rate hike. So far, Trump has sent conflicting signals about whether he plans to nominate her for a second term.
The dollar index had fallen to as low as 96.323 on Wednesday, having shed almost six percent on the year, before bouncing back a tad on the Fed's policy tightening.
- Prudential Financial Inc. Decreases Stake in JetBlue Airways Corporation (JBLU)
- EP Energy Corporation (EPE) Stock Rating Reaffirmed by Stifel Nicolaus
- Trump visits hospital treating 'critically injured' congressman
- Rafael Nadal Makes History With 10th French Open Title
- Mum trapped in London fire posts harrowing videos
- Cleveland Cavaliers' LeBron James says emotions 'all over the place' after loss
- Trump Makes Surprise Visit To Hospital To Visit Wounded Congressman
- Steelers sign 1st-round pick TJ Watt to finish draft class
- Xbox One X Enhanced Games: Here's What It Means
- Activision Blizzard, Inc (ATVI) Given Consensus Rating of "Buy" by Brokerages