Tuesday, February 25, 2020

US Federal Reserve Hikes Interest Rates At Last

Must read

Spending Cash Is Becoming A Thing Of The Past

The days of handing over cash could be numbered as the economy is in a shift to digitisation, warn campaigners.

Business Angels In Call To Ditch EU Investment Handicaps

Fund managers are worried that a Brexit trade deal will see the government scrap or restrict tax breaks on hugely successful investment schemes that...

Global Giant Shuts Poor Performing Funds

Investors choosing to pull their cash from wealth manager Jupiter have triggered the closure of two under performing funds. The global investment giant has announced...

Super Tax Refunds On The Way For 2.6m Aussie Savers

Millions of Australian superannuation savers are set to pick up a surprise cash payment from the taxman. Around 2.6 million saving for retirement in a...

The US Federal Reserve rate hike really came as no surprise after weeks of hints and signals from chair Janet Yellon.

The Fed hitched up the official interest rate in the US by 0.25% to 0.5% – the first increase in seven years.

Yellen confirmed the rate increase after a two-day session of the Federal Open Market Committee, which thoroughly reviewed financial and economic data in a debate whether to increase the rate now or wait until the New Year.

However, pundits had already criticised the Fed for holding off a rate increase since September.

“The decision to increase the interest rate reflects the confidence we have in the economy to keep on growing,” said Yellen.

US economy diverges from the rest

“The increase is very modest but gives an indication of how we view the current state of the US and global economy and where the future lies.”

Markets have generally accepted the rise in their stride.

The US dollar has also risen on the back of the announcement – pushing the euro down to $1.08.

However, increasing interest rates by the Fed marks a key event in world economics.

The US now has a divergent economic policy from the rest of the world. Many countries have low interest rate environments, but are handling their economies in a different way.

The Eurozone, for instance, is still pursuing a policy of monetary easing and will continue to do so for some time yet.

More rate rises on the way

The Bank of England is expected to follow the US example and raise the official interest rate from the record low of 0.5%. The Bank has pegged the rate for nine years.

Financial experts regard the slight increase in interest rates by the Fed as the start of a ‘normalisation’ of interest rates in the major economies back to between 2% and 3%.

The rate is expected to slowly increase during 2016 to 1.25% by the end of the year.

“We understand that policy changes take some time to work through the system,” said an official announcement from the Fed.

“The economic outcomes we are working towards will take some time to materialise.

- Advertisement -

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

Latest article

Spending Cash Is Becoming A Thing Of The Past

The days of handing over cash could be numbered as the economy is in a shift to digitisation, warn campaigners.

Business Angels In Call To Ditch EU Investment Handicaps

Fund managers are worried that a Brexit trade deal will see the government scrap or restrict tax breaks on hugely successful investment schemes that...

Global Giant Shuts Poor Performing Funds

Investors choosing to pull their cash from wealth manager Jupiter have triggered the closure of two under performing funds. The global investment giant has announced...

Super Tax Refunds On The Way For 2.6m Aussie Savers

Millions of Australian superannuation savers are set to pick up a surprise cash payment from the taxman. Around 2.6 million saving for retirement in a...

Builders Scamming Online Find-A-Trader Sites

Unscrupulous builders are scamming online find-a-trader platforms by bribing customers to post fake reviews, a web site owner claims. Even though thousands of home owners...