The rate hikes are coming! The rate hikes are coming! Eventually. Days after the Federal Reserve seemed to sound the alarm that the era of near-zero interest rates is ending, Chairman Ben Bernanke tempered those expectations a bit this week.
NEW DELHI: The US Federal Reserve, at the end of its two-day meet on Wednesday, said that it has decided to keep interest rates at between 0.25 per cent and 0.5 per cent, and has also reduced the number of interest rate hikes expected this year to two from four earlier. This is enough to bring risk-on rally back on Indian markets, say experts. However, the US Central Bank noted that the economy continues to face risks from an uncertain global economy which will keep inflation low for the rest of 2016.
A rate hike is coming. It is coming because the economy is not in crisis and zero rates are crisis rates, Bloomberg’s Richard Breslow writes. It is coming because the benefits of starting down the path to monetary policy normality are vitally important to the future health of the economy and restoring the Fed’s reaction function.
WASHINGTON: The Federal Reserve hiked interest rates for the first time in nearly a decade on Wednesday, signaling faith that the US economy had largely overcome the wounds of the 2007-2009 financial crisis. The US central bank's policy-setting committee raised the range of its benchmark interest rate by a quarter of a per centage point to between 0.25 per cent and 0.50 per cent, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.
Labor market conditions have improved significantly in the past month or so. Combine this with the dramatic improvement in households' finances this year, and one is forced to ask: why is there still so much pessimism in regards to the economy?