Federal Reserve Raises Interest Rate Target for Third Time Since 2006

Federal Reserve Raises Interest Rate Target for Third Time Since 2006

Federal Reserve Raises Interest Rate Target for Third Time Since 2006

Raising the Fed Funds target rate to 0.75-1.00 per cent marks the second rate hike in just over three months.

It is only the third time rates have been hiked since the 2008 financial crisis and comes as the world's biggest economy sees steady economic and jobs growth.

"A producer that's younger is not accustomed to seeing higher interest rates", said Charlie McConnell, senior vice president of Farm Credit of Western Arkansas. She wrote that means the FOMC didn't raise the rate as high as expected and will tolerate some overshooting of inflation.

The Bank of Japan left its policy unchanged as expected yesterday, increasing the divergence between itself and the Fed.

We believe the Fed is reluctant to send the message that it wants to raise interest rates quicker or reduce the size of its balance sheet for several reasons.

The Fed is increasingly confident that U.S. growth is quickening and sustainable.

While the Fed doesn't have any jurisdiction over credit card companies like Visa Inc (NYSE: V) or Mastercard Inc (NYSE: MA), these companies often set their variable credit card interest rates as a function of the fed fund rate.

And she said that despite the increase, the key lending rate interest rates remain low and continue to provide stimulus to the economic recovery. These include investors' expectations for future inflation and global demand for U.S. Treasurys.

In addition, Yellen says the unemployment rate was near its recent low in February at 4.7%, showing the committee the labor market is improving. The Fed's preferred measure of inflation is at 1.9%, though it acknowledged that a reading it focuses on more closely - which excludes volatile food and energy costs - remains below its 2% target, at 1.7%.

The benchmark rate was raised by a quarter of a percentage point to a range of 0.75 to 1.0 percent, following a similar sized increase in December. The statement projects two more rate hikes in 2017, which is largely on expected lines, should not hit the Indian markets hard.

Political uncertainty has supported gold for much of 2017, following surprise results in the United Kingdom and USA a year ago, on the concern that populist and anti-globalization parties could take hold in Europe. Every summer, the interest rate on new federal student loans changes and it's tied to the May auction of 10-year Treasury note.

New Zealand economist Shamubeel Eaqub said fixed rates would rise further, even though the Reserve Bank would not move this country's Official Cash Rate.

"However, by moving rates up again so quickly, the Fed now looks well on track to deliver".

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