S&P 500 Futures Rise After Federal Reserve Rate Hike

If you want higher rates, look to smaller players like fintech startups, online banks, community banks, or credit unions, which may raise their rates faster following a Fed rate hike as they attempt to attract more deposits away from the major banks. The U.S. central bank targets inflation at 2%, but relies on a measure of core PCE to gauge price pressures. The Federal Reserve may raise interest rates, more countries around the world may move to shake up the economic status quo and several high-profile updates on the US economy are scheduled for this week.

But buried in the details of the Fed decision was something that investors weren’t betting on.

Minneapolis Fed President Neel Kashkari was the only official to dissent in Wednesday’s decision, saying he preferred to leave rates unchanged.

Westpac said the statement did not appear to portray a significant “hawkish shift” by the US Federal Reserve.

With the increase, the federal funds rate, the interest rate at which banks and other financial institutions borrow from one another, is now at 0.75 to 1 percent.

The Federal Reserve, which has struggled to stoke inflation since the financial crisis and up until now raised rates less frequently than it and markets expected, may be about to hit the accelerator on rate hikes. The Fed is projecting 2% annual growth until 2019.

While Trump could technically remove her as chair, she could still remain on the Fed’s board of governors until her 14-year term expires in 2024-enduring any Trump presidency.

Worries that the Fed’s new economic forecasts will signal a more aggressive pace of monetary tightening also pushed yields higher, analysts said. With interest rates at zero, the Fed has no way to juice a flagging economy. “We have some confidence in the path the economy is on”.

The Fed’s statement made few changes from the last one issued February 1.

The Nasdaq Composite was up 10.63 points, or 0.18 per cent, at 5,867.44.

US Treasuries also gained, while the greenback fell, as the Fed maintained its forecast for a total of three rate hikes this year.

Given Trump’s track record of excoriating the central bank, many are bracing for a withering barrage of twitter criticisms Wednesday following the first rate hike of his presidency.

In 2013, then-Chairman Ben Bernanke sent markets into a panic merely by mentioning that the Fed was contemplating slowing the pace of its bond purchases, which it was using then to keep long-term borrowing rates low.

“Raising rates [this] week is as close to a certainty as you ever get in this business”, Scott Clemons, chief investment strategist at Brown Brothers Harriman, told The Washington Post.

Longer term, he said, investors need to be concerned about inflation in the future.

Banks still haven’t raised savings rates from the last time the Fed raised its rate in December, according to WalletHub.

President Trump has big plans to spend on overhauling US infrastructure.

Worldwide interest rates drive New Zealand’s long-term rates, which have already started to move up.

The Fed’s brighter view of the economy at least partly takes into account President Trump’s proposed tax cuts and beefed-up infrastructure and military spending.

The ultra-low rates were meant to stimulate the economy by encouraging borrowing and investment.