Fed raises U.S. rates as expected as more increases loom

While most Americans are familiar with the idea of a federal interest rate, interest rates on different US bonds, bank accounts, credit cards, mortgages and other financial instruments vary widely.

Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.53 per cent to 839.43 tonnes on Wednesday.

Plus, rates are still relatively low, and many experts don’t expect them to rise above 5% this year. The statement said Kashkari preferred to leave rates unchanged.

She stressed that the central bank expected the economy to grow at a rate that would warrant gradual increases in interest rates.

On the Fed’s next move, 12 of the 18 dealers in the survey said the bank would lift rates by another quarter point by the end of the second quarter to between 1.0 percent and 1.25 percent, while six see the Fed holding off until the third quarter.

Higher infrastructure spending and tax cuts could stimulate the economy and inflation faster than the Fed now anticipates.

The unemployment rate was 4.7% in February after another strong month of labor market growth in which the economy added 235,000 net new jobs.

“With this increase well anticipated by most markets, Keller Williams does not expect any dramatic change in the current path of mortgage rates”.

Wu said that it is unlikely that the central bank will follow the Fed in tightening its monetary policy for the moment, as that could slow the pace of the economic growth. We expect global corporate default rates to remain low and therefore a favourable environment for risk assets like investment grade and high yield corporate bonds.

Policy makers forecast inflation will reach 1.9 percent in the fourth quarter this year, and 2 percent in both 2018 and 2019, according to quarterly median estimates released with the Federal Open Market Committee statement. The Fed took rates to near 0% to help the economy recover after the brutal financial meltdown in 2008-09.

Yet for the same reason, some caution that if Trump’s program fails to survive Congress intact, concerns will arise that the president’s plans won’t deliver much economic punch. But for the first time since the crash we are now looking at a steady upward move in United States short-term interest rates.

A report from the National Association of Home Builders/Wells Fargo showed that confidence among USA homebuilders climbed in March to reach the highest level since 2005.

“First, the Fed didn’t move up the dot plots, so the decision was more dovish than the market had feared”, Christian Hawkesby, head of fixed income portfolio management at Harbour Asset Management, said.