US Federal Reserve System raises base interest rate to 0.75-1%

The US central bank has, as universally expected, raised interest rates again in the face of a strengthening domestic economy. The hike directly increases the cost of borrowing money.

According to the “dot plot” of rate projections released after the meeting, Fed officials expect to see two more hikes this year. We anticipate at least two more rate hikes, with a good chance of three by the end of the year dependent upon the extent of fiscal stimulus that is announced by the USA government. Even Fed Chair Janet Yellen herself said a rate hike would likely be appropriate in a recent speech. While most Americans are familiar with the idea of a federal interest rate, interest rates on different USA bonds, bank accounts, credit cards, mortgages and other financial instruments vary widely.

That might not be a deal breaker for many buyers, but it could hurt those shopping in more expensive neighborhoods, or those right on the margin of being able to afford a home. During those years, any slight shift in sentiment about when the Fed might begin raising rates – a step that would lead eventually to higher loan rates for consumers and businesses – was enough to move global markets.

Ms. Yellen and her top lieutenant, Stanley Fischer built on those views in comments on March 3, with Mr. Fischer saying “if there has been a conscious effort” to boost expectations of a rate rise, “I’m about to join it”.

Higher interest rates can push up mortgage rates, rates on vehicle loans, and credit card rates.

But he said shorter-term fixed rates would stay low for some time yet.

The unemployment rate fell to 4.7% in February, a number the Fed sees as a good sign as it works towards maximizing employment and moderating inflation.

Tuffley said if Trump created higher levels of inflation in the U.S. than expected, the Federal Reserve might have to move faster.

Markets lurched-stocks up, bond yields and the dollar down-as soon as people realized that Fed chair Janet Yellen and her colleagues didn’t come off almost as hawkish as expected.

Still, the Fed’s decision to lift interest rates in December 2016 was met with plenty of squawking by some ideologically extreme Republicans.

Fed officials made the announcement following the two-day meeting of the Federal Reserve Open Market Committee.

Business investment “appears to have firmed somewhat”, the Fed said in language that reflected a stronger sense of the economy’s momentum.

Sales are up 5.7 percent from a year ago. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. What about the rapid rises in stock prices?

It’s not the one you think.