Fed raises rates amid improved U.S. economic outlook

At the moment the Federal Reserve is expecting a total of three rate increases this year, although Fed chair Janet Yellen said it was too soon to say what effect President Donald Trump’s plans to cut taxes and increase spending might have on the direction of the USA rate. For the record, they’re still very low by historical standards, which means the Fed is still helping the economy a lot.

Right now, the Central Bank is expected to raise rates three times this year, but if its actions become more aggressive, it could bring a sharper upswing in mortgage rates. Little more than a month ago there was significant doubt among market analysts about whether another interest rate increase would be announced at Wednesday’s meeting, following on from a rise in December.

“When I look at our sequence of communications, they seem to me to have been reasonably consistent over this entire period”, Ms. Yellen said at the press conference.

Tony Bedikian, Managing Director of Global Markets at Citizens Bank, said further interst rate increases will depend on what the economy does over the next few months.

But the overall economy is showing many positive signs.

“It puts pressure for more variable rate products within the industry rather than fixed rate”, Hickman said. “Because we know it’s going to be dynamic now, it’s not going to be static for awhile”.

That marked the Fed’s third rate hike since the financial crisis and the second time in three months, suggested the Fed has stepped up its pace of tightening with more confidence in the strengthening of the USA economy. After accounting for the new jobs, the unemployment rate came out to 4.7% in February, remaining well below the central bank’s 5% target.

This is only the third increase since the financial crisis of 2008 – but the second since December.

In a statement, members of the Federal Open Market Committee projected the rate to be 1.4 percent at the end of this year, 2.1 percent at the end of 2018 and 3 percent at the end of 2019, as the economy and inflation hit the Fed’s targets. Monetary policy remains accommodative, supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

If the Fed raises rates, Bank of America will see its earnings rise.

“There’s no question that over the long term, higher United States rates will lead to a higher U.S. dollar”, he said.

Mortgage rates will rise: Looking to buy a house?

The Fed indicated that the economy is stabilizing. “Rates are still likely to get higher over time”.

The Federal Reserve gave the go ahead to a much-anticipated rate hike Wednesday afternoon. However, with the Fed expected to tighten two more times this year, that would take the upper range of the fed funds rate to 1.5 per cent, or the level of Australia’s cash rate. “It’s still at historically low levels”.