Medical

Second Time in the Year Federal Reserve Increases Rates

Second Time in the Year Federal Reserve Increases Rates

It was below $900 billion in 2007. A slide in technology stocks weighed on the Nasdaq and S&P 500 as investors anxious about the pace of economic growth after the rate increase and weaker-than-expected inflation data. Inflation was expected to be at 1.7 percent by the end of this year, down from the 1.9 percent previously forecast.

"The combination of rising debt burdens and rising interest rates is starting to strain some households, and we're seeing delinquencies pick up from recent lows", McBride says.

In her press conference after the announcement, Fed Chair Janet Yellen asserted that USA economic growth appears to have rebounded enough to justify both higher rates and a return of Fed-held assets to the wider market.

Remember too, that one key difference since last the Fed hiked in March is that there is now much less confidence in the Trump administration's ability to carry out either meaningful stimulative spending or midwifing a tax cut package which would do more than pump up equity prices.

Weighing on Treasury yields and bolstering bond prices, the tepid inflation numbers outweighed traders' concerns over the Fed's announced quarter-point rate hike and plans to reduce its balance sheet this year.

"Because the Korean market rate has been rising, the possibility of a rapid capital outflow due to Fed's rate increase, is deemed low; Korean policy rates were lower than U.S. between August 2005 and September 2007, but Korea survived".

They forecast US economic growth of 2.2% in Y 2017, an increase from the previous projection in March.




Joseph Gagnon, senior fellow at the Peterson Institute for International Economics and former visiting associate director of the Division of Monetary Affairs at the US Federal Reserve Board, told Radio Sputnik that rates will remain relatively low for some time despite the rate hike. Fed officials project growth of roughly 2 percent in 2017.

US stock futures signalled a rocky start on Wall Street after Wednesday's rate hike and another tumble in tech stocks.

The market is expecting one more rate hike by the Fed in the current fiscal year.

However, this implied "dot plot" liftoff path is not priced in to markets, which expect a fed funds rate of only 1.5% by year-end 2018. U.S. stock markets the S&P 500 and the Nasdaq trimmed down at the close.

London's FTSE 100 Index joined global markets in the red after Wednesday's U.S. interest rate hike and as oil prices remained under pressure.

CURRENCIES: The dollar rose to 109.75 from 109.57 yen.

KEEPING SCORE: Germany's DAX fell 0.6 percent to 12,727.14 while the CAC40 of France sank 0.8 percent to 5,202.60.


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