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Published On: Wed, Mar 15th, 2017

U.S. Federal Reserve Raises Short-Term Interest Rates by 0.25%

nsnbc : The United States’ Federal Reserve Bank has raised short-term interest rates for the third time since the 2007 – 8 onset of the financial crisis, stepping up the pace of tightening as policymakers grow increasingly confident that America’s enduring recovery will lift inflation.

FEDERAL RESERVEThe Federal Reserve Bank (Fed) raised the target range for the federal funds rate from 0.75 per cent to 1 per cent, in a move that has come earlier than many were expecting it as recently as last month.

However, Fed policymakers stuck with previous median projections that there will be a total of three increases in rates this year, defying predictions from some analysts that it would release a more aggressive set of rate-raising forecasts.

One rate-setter, Neel Kashkari of the Minneapolis Fed, dissented from the vote for a rise, arguing in favor of unchanged rates.

In a semantic approach the Fed’s statement also stressed that its inflation target is symmetric, in an acknowledgment that price growth could surpass its 2 per cent target without forcing the central bank to clamp down precipitately.

Treasury yields dived and the US dollar came under pressure immediately after the statement. The yield on the 10-year treasury note, which moves inversely to price, fell by as much as 8.9 basis points to 2.511 per cent, its biggest intraday drop in two months. The two-year yield was down 4.6 per cent at 1.330 per cent. For the younger readers or older ones’ who haven’t yet heard it – the Federal Reserve bank is about as “federal” as Federal Express and it has no reserves.

A/N – nsnbc 15.03.2017

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