Fed raises key interest rates

Yet the unemployment rate fell last month to 4.6 percent, much earlier than the Fed expected.

“It appears to be Fed’s response to the incoming administration’s stated pursuit of strong reflationary policies and fiscal stimulus impacting medium term inflationary outlook”, he said.

As a result, bank savings and CD rates may rise only after a lag of six months or more after a Fed move, McBride says.

Mortgage rates have been surging, for reasons that have little to do with the Fed.

Central bank policymakers also shifted their outlook to one of slightly faster growth, with President-elect Donald Trump planning a simultaneous round of tax cuts and increased spending on infrastructure. So I do intend to serve out my four-year term. Average credit card rates are about 16.25%, while home equity lines about 4.75%, according to Bankrate.com. Analysts said that just one additional rate increase projected into next year, combined with a cautious tone in the policy statement, boosted the U.S. dollar without sending it excessively higher. Perhaps more important will be clues about what the Fed sees for the future.

After initially wobbling between gains and losses following the Fed’s announcement, stocks turned moderately lower in afternoon trading following the rate increase decision. And those trends can be shaped by events overseas as well as in the United States. Wall Street already thinks these steps will spur economic growth and inflation, while supporting company earnings; stocks surged to new highs post-election, while bonds sold off.

The Fed’s refreshed economic growth forecasts.

Yet it’s unclear if investors’ expectations will pan out.

“President Obama’s handing over to President-elect Trump is just about as good as the economy has been since any time before the financial crisis”, said David Stockton, a former chief economist at the Federal Reserve who is now a senior fellow at the nonprofit, nonpartisan Peterson Institute for International Economics in Washington. On that assumption, some are revising their forecasts for Fed rate hikes in 2017.

But at least some of Trump’s proposals could face resistance in Congress.

In its statement, the Fed said that risks to the economy remain “roughly balanced” between factors that could slow or increase growth, which was no change from the language in its November assessment. And Donald Trump has – in bombastic fashion – called for faster USA gross domestic product-growth. The unemployment rate is at a nine-year low of 4.6 percent. The move will mean modestly higher rates on some loans.

“They’re afraid that we’re now at the point where the economy is so close to full employment that they’ll get more inflation than they want, so they’re gradually taking their foot off the monetary accelerator”. Mortgage rates and other borrowing costs won’t likely rise in a straight line, which is why most people need not rush to lock in a rate.

She said corporate tax reductions, which Mr Trump has promised, could stimulate investment but she declined to say if personal tax cuts would help productivity. Variable-rate loans would begin to charge more interest. That contrasts with a sharp increase in the yield on the 10-year bond, which has jumped about a half point.

The dollar hovered near a 14-year peak against a basket of major currencies on Thursday, receiving a major boost after the Federal Reserve increased the number of projected interest rate hikes for 2017.

Don’t go too short, though.

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