As expected, Fed raises rates
December 14, 2016, 7:31 pm

The US economy has improved with jobless claims down for 86 straight weeks, likely prompting the Fed to move to more rate hikes next year [Xinhua]

The Federal Open Market Committee said that market conditions had become favorable toward a rate increase and expected further tightening of fiscal policy in 2017.

The overnight lending rate now stands between 0.5 and 0.75 per cent.

The Fed said that it was seeing continued inflation rate growth toward its two percent target and said that job gains were solid over the past year – growing at an average monthly rate of 180000 additional jobs.

In a statement on Wednesday the Fed said it believed the “labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year”.

Throught 2016 markets were sent into a tailspin as they anticipated from one meeting to the next that the Federal Reserve would raise interest rates as predicted at the end of last year.

The Fed had said it would probably raise interest rates four times in 2016 but held off due to market turmoil in China, the strengthening of the US dollar, and near record low oil prices.

The US economy itself was wobbling in the first two quarters of 2016 as it posted lower-than-expected growth.

There had been fears that President-elect Donald Trump’s new economic policies could derail the Fed’s move toward higher interest rates. Trump had also said he wanted to revisit key economic regulations.

During her Congressional testimony last month, Fed chief Janet Yellen warned Trump not to “roll back the clock” and also said that the “economy that is operating reasonably close to maximum employment with inflation heading back to 2 percent”.

The BRICS Post with input from Agencies