Federal Reserve hikes key interest rate for second time in 2018

Fed Rates Increased for Second Time This Year

Fed Rates Increased for Second Time This Year

The Federal Open Market Committee indicated that even though it's stepping up the pace of interest-rate hikes, economic growth should continue apace.

The Fed last raised the benchmark in March, the sixth increase since December 2015, as it tries to keep the economy growing at a sustainable pace without fuelling inflation.

This hike, which was widely expected, is the Fed's second of 2018, and the central bank signalled it is likely to do two more increases by the end of this year.

US Treasury yields rose after the Federal Reserve raised its key rate and signaled two more hikes this year, a greater amount than previously expected. In a few hours, several banks will respond by raising their prime lending rate, the starting point of borrowing costs for nonmortgage loans like credit cards and auto loans.

Rates for savers have tended to lag the Fed's hikes.

Beginning in 2008 in the midst of the financial crisis, the Fed kept its key rate unchanged at a record low near zero for seven years.

A decade after the recession, the Fed has made progress on its objectives.

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.

Greg McBride, chief financial analyst for the interest rate website Bankrate.com, said that could "squeeze" families if wage growth remains sluggish. And that means higher interest rates on plastic.

However, higher rates would help savers earn more interest on their deposits.

The Fed announced the rate rise at the close of a two-day meeting in Washington. "This change is only about improving communications".

In a stark reminder of the potential damage from the trade dispute, Hong Kong-listed shares of Chinese telecommunications giant ZTE Corp fell as much as 41.5 percent, wiping off about $3 billion of its market value, as it resumed trade after agreeing to pay up to $1.4 billion in penalties to the US government. In the longer run, it maintained the forecast for 1.8% growth.

In their statement, Fed policymakers noted that the labor market "has continued to strengthen and that economic activity has been rising at a solid rate".

The committee sees further declines the unemployment. With the economy now nine years into an expansion, the move reflects the steadiness of growth, the job market's strength and inflation that's finally nearing the Fed's target level. Fed officials repeated their assessment that "risks to the economic outlook appear roughly balanced".

Core inflation projections, which strip out volatile food and energy prices, is expected to tick slightly higher to 2.0% this year, up from March's projection of 1.9%.

On inflation, policy makers forecast a slight overshoot of their target starting in 2018 at 2.1 per cent, and running through 2019 and 2020, compared with a 2020 overshoot in March's projections. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and global developments.

Notícias recomendadas

  • God of War will receive a New Game Plus mode

    God of War will receive a New Game Plus mode

    Unfortunately, the company didn't provide an exact date, so fans should keep an eye out for any announcements from Sony. It's been almost two months since Sony launched God of War on the PS4, giving players ample time to complete the game.
    Childish Gambino performs ‘This is America’ at Chance the Rapper’s OpenMike

    Childish Gambino performs ‘This is America’ at Chance the Rapper’s OpenMike

    He does, and launches into a performance of the song, rapping and doing some of the iconic dance moves from the song's video.
    Canada row escalates, Europeans criticize Trump's G7 move

    Canada row escalates, Europeans criticize Trump's G7 move

    Trump ". "We went through it". "Canadians are polite and reasonable but we will also not be pushed around", he said. A senior United States administration official said that Trump had been angered by Trudeau's comments.
  • 'Bachelorette' contestant convicted of assault and battery

    'Bachelorette' contestant convicted of assault and battery

    The judge ordered him to stay away from the victim and attend three Alcoholics Anonymous meetings per week during those two years. If he fails to comply with the terms, he could be ordered to serve his term behind bars.
    Bitcoin Price was Manipulated by Tether, Researchers Claim

    Bitcoin Price was Manipulated by Tether, Researchers Claim

    Such price supporting activities are successful, as Bitcoin prices rise following the periods of intervention. Regulators worldwide are increasing their scrutiny of cryptocurrency markets.
    AT&T legal win could spur another jumbo bond; more M&As

    AT&T legal win could spur another jumbo bond; more M&As

    The Department of Justice had sued AT&T to block the merger. "We knew we had to have scale", he said, according to Variety . Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue.
  • One in three Americans take meds with depressive side effects

    Prescriptions for drugs including painkillers and blood pressure medications may carry a risk for depression , a new study finds . The study numerous drugs listed were used concurrently, which increased the risk of experiencing depression.
    North America will host the World Cup in 2026

    North America will host the World Cup in 2026

    Next, Fifa's evaluation task force raised serious doubts about Morocco's capacity to host the World Cup. The only two official bids came from the U.S. -Canada-Mexico of North America, and Morocco of Africa.
    Ariana Grande 'engaged' to Pete Davidson after whirlwind romance

    Ariana Grande 'engaged' to Pete Davidson after whirlwind romance

    The news comes just a few days after the pair, both 24-years-old, have been sending flirty messages about each other on social media.
  • PSG escape UEFA sanctions but remain under scrutiny

    PSG escape UEFA sanctions but remain under scrutiny

    The decision followed a detailed review of transfer contracts and analysis of the related management accounts. The report says that while the club is not breaking even, it is within the acceptable deviation.
    CDC: Toddlers In US Eating Too Much Sugar

    CDC: Toddlers In US Eating Too Much Sugar

    However, the scientists behind the study are now planning on analyzing the products with added sugar that kids usually consume. The measured amount of extra sugar reportedly consumed by the children in the study was based entirely on the parent's memory.
    Pokemon Let's Go Pikachu And Eevee Require A Subscription To Play Online

    Pokemon Let's Go Pikachu And Eevee Require A Subscription To Play Online

    The game can also be integrated with PPokemon Go app and transfer their Pokemon from the app to the Switch game. Pokemon: Let's Go , Pikachu and Pokemon: Let's Go , Eevee will come out on November 16th.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.